FIJI
RENEWABLES READINESS
ASSESSMENT
June 2015
Copyright © IRENA 2015
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About IRENA
The International Renewable Energy Agency (IRENA) is an intergovernmental organisation that supports
countries in their transition to a sustainable energy future, and serves as the principal platform for international
cooperation, a centre of excellence, and a repository of policy, technology, resource and financial knowledge
on renewable energy. IRENA promotes the widespread adoption and sustainable use of all forms of renewable
energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy, in the pursuit of sustainable
development, energy access, energy security and low-carbon economic growth and prosperity.
Acknowledgements
This is a joint publication of the Fiji Department of Energy (DoE), Ministry of Infrastructure & Transport and the
International Renewable Energy Agency (IRENA). It was prepared by IRENA with the assistance of a principal
consultant, Gerhard Zieroth, in coordination with the ministry and the DoE. The report incorporates views
submitted by national stakeholders in Fiji via an open, transparent and participatory consultation process, in
which all were given the opportunity to make their contributions.
The following agencies in Fiji also provided valuable comments on the draft:
• Clay Engineering
• Fiji Electricity Authority (FEA)
• Fiji Sugar Corporation (FSC)
• Department of Forests
• Ministry of Industry and Trade
The Government of Fiji acknowledges the support provided by IRENA, including funding and technical
assistance for this important work, which involves identifying pathways towards further utilisation of renewable
energy resources in Fiji.
Authors: Yong Chen (IRENA), Gürbüz Gönül (IRENA), Gerhard Zieroth (consultant)
Disclaimer
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or of its authorities, or concerning the delimitation of frontiers or boundaries
FIJI
RENEWABLES READINESS
ASSESSMENT
II
Ghana
Fiji
FOREWORD
from the Minister
for Infrastructure
and Transport
The Fijian Government remains committed to providing all Fijians with access to modern energy services which
are also clean, affordable and reliable. Fiji has fully embraced the Sustainable Energy for All (SE4All) initiative
and is pursuing a ‘Green Growth’ development pathway for the nation. As such the Renewable Energy Readiness
Assessment (RRA) is indeed timely and complements our collective efforts towards greater utilization of our local
and renewable energy resources.
The RRA process in Fiji has been an open and participatory process which undoubtedly has not only catalysed
much more interests in the energy sector but subsequently identified renewable energy investment opportunities
as well. The active involvement of all stakeholders has enabled the RRA report to be a detailed assessment of Fiji’s
domestic conditions for the development and deployment of renewable energy and identified some key issues
that need to be addressed for further development of renewable energy resources. Moreover, the identification of
specific areas of actions and implementable renewable energy projects that can help address the issues identified
is commendable.
Furthermore, the RRA report offers a renewed platform for action to all stakeholders in the form of five serviceresource pairs:
•
•
•
•
•
Grid electricity supply- geothermal energy
Grid supply- solar PV electric generation
Grid supply – biomass-fuelled electricity generation
Off-grid Rural Energy Supply - Solar
National and Regional Maritime Transport – more efficient vessels.
As such, continued partnerships and concerted efforts for advancing actions on developing each service-resource
pair is critical to achieving Fiji’s SE4All goals; 80 % share of renewable energy in the electricity generation mix by
2020 and 25 % share of renewable energy in the overall energy mix by 2030.
Finally, the completion of the RRA report is yet another indication of Fiji’s readiness to work closely with all
stakeholders including development partners in further greening the energy sector in Fiji. In particular, I extend
my sincerest appreciation to the International Renewable Energy Agency (IRENA) secretariat for its continued
support and also for funding and providing technical assistance towards the successful completion of this report.
I commend every effort towards securing a sustainable energy future for Fiji.
Honourable Pio Tikoduadua
Minister for Infrastructure and Transport
Renewables Readiness Assessment III
IV Fiji
Ghana
FOREWORD
from the IRENA
Director-General
Across the Pacific, small island states face daunting costs for fuel imports and recurrent risk from global oil price
volatility. Fiji has resolved to improve its energy security and contribute to combatting climate change based on a
balanced portfolio of indigenous renewable energy resources.
The country’s Renewables Readiness Assessment (RRA), undertaken in co-operation with the International
Renewable Energy Agency (IRENA), has produced a holistic evaluation of current conditions in the sector and
identified key actions that can be taken to overcome barriers to increased renewable energy deployment. This is
a country-led process, with IRENA primarily providing technical support and expertise to facilitate consultations
among different national stakeholders.
Since 2011, more than 20 countries in Africa, the Middle East, Latin America and the Caribbean, and the Asia-Pacific
region have undertaken the RRA process, which generates knowledge of best practices and supports international
co-operation around the accelerated deployment of renewable energy technologies. Fiji, a strong and consistent
supporter of IRENA’s mission, is one of those countries.
As the costs of renewable energy technologies continue to decline, Fiji is increasingly able to make use of its full
range of renewable energy resources. These include large and small hydropower resources, as well as biomass,
geothermal, solar and wind energy. All of these can help to ensure a reliable, affordable energy supply. This, in turn,
will support economic growth, particularly in rural communities.
The National Energy Plan tabled in 2014 offers a promising path that would lower the risks, both real and perceived,
for renewable energy investments. Reducing investment uncertainty is crucial for Fiji to create an enabling
environment in which renewable energy flourishes. The co-ordination of different government ministries, as well
as international donors, will be essential in order to meet the targets set out in the 2014 action plan for rural
electrification.
IRENA wishes to thank Minister Pio Tikoduadua and his team at the Ministry of Infrastructure and Transport for
their generosity in hosting this study, along with their valuable perspective on the energy challenge for small island
developing states. The Fiji Department of Energy provided solid support, while other governmental agencies also
participated actively. Their insights are much appreciated as we facilitate further RRAs in the Pacific region and
beyond.
I sincerely hope that the outcomes of the consultations will strengthen Fiji’s pursuit of accelerated renewable
energy deployment. IRENA stands ready to provide continuing support in implementing the actions identified, as
the country strives to show the way forward to a sustainable energy future.
Adnan Z. Amin
Director-General, IRENA
Renewables Readiness Assessment
V
VI Fiji
Ghana
TABLE OF CONTENTS
LIST OF FIGURES
LIST OF TABLES
ABBREVIATIONS
EXECUTIVE SUMMARY
VIII
VIII
IX
XI
IINTRODUCTION
1.1 Country Background: Economy and Energy
1.2 Renewables Readiness Assessment (RRA)
Process in Fiji
1
1
4
II
ENERGY SECTOR AND RENEWABLE ENERGY
2.1 Fiji’s Key Energy Challenges
2.2 Final Energy Consumption
2.3 Energy Demand Outlook
2.4 Energy Supply
2.5 Supply of Electric Power
2.6 Renewable Electricity
5
5
6
7
8
9
11
III
ENABLING ENVIRONMENT FOR RENEWABLE
ENERGY DEVELOPMENT
3.1 Fiji’s Renewable Energy Targets
3.2 Power Sector Development Plan
3.3 Enablers for Investments in Renewable Energy
3.4 Financing and Investment
19
20
21
21
26
IV OPPORTUNITIES FOR DEPLOYMENT
OF RENEWABLE ENERGY
27
VRECOMMENDATIONS
33
VIREFERENCES
37
ANNEX
39
Renewables Readiness Assessment VII
LIST OF FIGURES
Figure 1 Population Density by Province
1
Figure 2 Fiji’s GDP Annual Growth Rates (1988-2013)
2
Figure 3 Comparison of Annual Growth Rates
3
Figure 4 Ratio of Fuel Imports to Total Merchandise Imports (2004-2012)
5
Figure 5 Fiji’s Final Energy Consumption by Sector (1990-2010)
6
Figure 6 FEA’s Projection for Supply-Demand Balance (new solar unit excluded)
7
Figure 7 Electricity Tariff Rates, 2010
8
Figure 8 Fiji’s Total Energy Consumption (1990-2010)
9
Figure 9 FEA Service Supply Areas in Fiji
10
Figure 10 Global Living Biomass Carbon Density Map, 2000
13
Figure 11 Solar Energy Resource in Fiji
14
Figure 12 Hot Springs Locations in Fiji
16
Figure 13 Schematic Illustration of the Correlation of Policy Objectives
19
Figure 14 Institutional Structure for Energy Sector Management in Fiji
25
Figure 15 Investment Cost for Geothermal Power
41
LIST OF TABLES
Table 1 FEA’s Installed Electricity Generation Capacity11
Table 2 Fiji’s Geothermal Energy Potential
16
Table 3 Current Status in Geothermal Licensing
17
Table 4 Energy Policy Targets20
Table 5 Maximum Retail Prices for Fuels April 201325
VIII Fiji
Ghana
ABBREVIATIONS
ADB
APEC
DoE
FEA
FJD
FSC
GDP
GoF
GWh
IPP
IRENA
JBIC
ktoe
kVA
kWh
LPG
MJ
MWe
NEP
O&M
PV
RBF
RRA
SE4ALL
SOPAC
SPC
ULP
UNDP
USD
USP
TWh
TJ
WBG
Asian Development Bank
Asia Pacific Economic Cooperation
Department of Energy
Fiji Electricity Authority
Fiji Dollar
Fiji Sugar Corporation
Gross domestic product
Government of Fiji
Gigawatt-hour
Independent Power Producer
International Renewable Energy Agency
Japan Bank for International Cooperation
Thousand tonne of oil equivalent
Kilovolt-amp
Kilowatt-hour
Liquefied Petroleum Gas
Megajoule
Megawatt electricity
National Energy Policy
Operations and Maintenance
Photovoltaic
Reserve Bank of Fiji
Renewables Readiness Assessment
Sustainable Energy for ALL
South Pacific Applied Geoscience Commission
Secretariat of the Pacific Community
Unleaded Petroleum
United Nations Development Programme
United States Dollar
University of the South Pacific
Terawatt-hour
Terajoule
World Bank Group
Exchange Rate: USD 1 = FJD 2.08 (Fijian Dollar) on
13 June 2015.
Renewables Readiness Assessment IX
Biomass Feedstock
Photo: Government of Fiji
X
Fiji
EXECUTIVE SUMMARY
Like other Pacific Island Countries, Fiji depends
heavily on imported petroleum-based fuels. The
fluctuation of global oil supply affects not only
energy security, but also energy prices. Over
2004-2008, international oil prices rose, drastically
increasing Fiji’s energy expenditure. In 2008, the
country spent as much as 17% of its gross domestic
product (GDP) on energy, up from 7% in 2003 (Fiji
Islands Bureau of Statistics, various years; Reserve
Bank of Fiji, various years). With a comparatively
large economy, Fiji spends even more on oil imports
than other Pacific Island countries do.
Interestingly, spending on imported fuels remained
as high as FJD 550 million (around USD 310 million)
or more annually in 2008-2011, even as international
oil prices declined by about a third. The extent to
which the country can benefit from further oil price
decreases remains to be seen.
Furthermore Fiji’s emerging industries, including
manufacturing, mining and construction, are energyintensive. At the same time, 4% of urban residents
and nearly 20% of rural dwellers still lack electricity
access, with remote locations and prohibitive costs
for grid extension posing a challenge.
Total installed power generation capacity is
269 megawatts (MW), of which the Fiji Electricity
Authority (FEA) operates 94%, delivering
857 gigawatt-hour (GWh) in 2013. Most of this was
FEA grid-connected capacity, which accounted for
254 MW by 2013, some 30% higher than projected
in the 2010 FEA Power Development Plan for Fiji
(for 2011-2020). FEA’s current generation fleet
comprises about 55% hydro, 40% diesel and
heavy fuel oil and 1% wind, with the remaining
4% provided by two co-generators, Tropik Woods
Limited and Fiji Sugar Corporation (FSC). To
reduce environmental impact, FEA aims to replace
retired diesel gensets with renewable energy and
is looking for independent power producers (IPPs)
to provide additional hydro, geothermal, wind,
biomass or solar.
Hydropower accounts for the largest share of
electricity supply. This makes the power system
more vulnerable to seasonable variation, extreme
weather events or severe drought. In the Pacific
environment, hydropower often faces a challenge
in providing reliable power supply (South Pacific
Applied Geoscience Commission (SOPAC), n.d.).
Scaling up non-hydro renewables, such as solar,
wind and geothermal energy, would diversify the
energy mix and improve Fiji’s energy security.
Taking into account high import costs for fossil
fuels and the continued reduction of renewable
electricity generation costs, this ought to be an
economically attractive option (IRENA, 2013).
A higher share of renewables in the power system
is achievable from a technical perspective. Supplydemand modelling during the drafting of the
National Energy Policy (NEP) 2014 indicated the
feasibility of obtaining more than 80% of electricity
from renewable sources by 2020 and 100% by
2030. Achieving these targets would require:
1) a strong enabling environment, including for
the private sectors; and 2) risk-sharing/mitigation
mechanisms for geothermal energy, which entails
high costs and risks during exploratory drilling.
Fiji is well endowed with a broad mix of renewable
energy resources, including hydropower, solar,
biomass, wind and geothermal energy. However,
the full potential remains to be fully assessed and
made public.
Scaling up both hydropower and non-hydro
renewables would contribute significantly to the
development of sustainable, reliable and affordable
energy that would support economic growth and
enhance energy security, particularly in rural areas.
Fiji’s Renewables Readiness Assessment (RRA)
took place against this backdrop, building on the
discussions around renewables-related issues,
as highlighted in Fiji’s energy policy review. This
RRA identifies key actions to mobilise resources
and offers guidance for fine-tuning Fiji’s future
renewable energy policy.
The government’s vision for Fiji’s energy future in
Fiji became clearer in the draft NEP 2014, which
emphasises sustainable “resource efficient”, “cost
effective” and “environmentally sustainable” energy
development. The draft NEP 2014 set out policy
objectives in two tiers: first, affordability for all
Fijians; and second, sustainable energy supply with
less expenditure on imported fuels.
Replacing imported fossil fuels with indigenous
renewables has been identified as one of the key
instruments to achieve these policy objectives.
Renewables Readiness Assessment XI
Doing so cost-effectively depends on establishing
the enabling environment for renewable energy
development. For Fiji to attract private investments
in the power sector, all stakeholders must be
actively engaged.
The RRA team examined the general enabling
environment, as well as energy resources and
conversion technologies, described in this report
as service-resource pairs. Renewable-based
options are largely undeveloped or have yet to
be promoted or in Fiji. In some cases, renewable
energy options could complement “conventional”
service-resource pairs.
The following service-resource pairs have been
identified as consistent with the draft NEP 2014
under consideration by Government of Fiji.
1. Grid-based
power/geothermal
energy:
Geothermal energy could reduce electricity
supply costs on FEA’s grids. The World Bank
has agreed to provide technical assistance to
identify 2-3 major sites for geothermal-based
power generation in Fiji. Given Fiji’s great potential for geothermal energy
development, the private sector has expressed
strong interest. However, barriers to investment
need to be effectively addressed.
Firstly, the independent power producers (IPP )
framework is insufficient. Uncertainties about to
tariffs and other conditions of power purchase
agreements weigh heavily given significant
exploration risks. Geothermal power’s high
investment costs and associated exploration
risks pose a persistent challenge from the
perspective of both developers and financers.
In many markets, drilling costs are offset with
public resources, either through government or
multilateral development banks. Uncertainty also remains with regard to
licensing. Four special prospector licences from
the Department of Mineral Resources were
pending while two others had lapsed. Licensing
has been under discussion in the review of the
Mining Act initiated in 2014. Stricter background
checks of companies that apply for prospector
licences may help to ensure that licensees
actually carry out the work after a licence is
issued.
Lastly, technical capacity is insufficient in
both the private and public sectors in Fiji;
XII Fiji
the Department of Energy (DoE), FEA and
the Department of Mineral Resources all
lack personnel with specific knowledge and
experience in geothermal power development.
Capacity building is needed for the public
sector to oversee geothermal development.
2. Grid-based power/solar photovoltaic (PV):
On-grid PV installations are slowly gaining
popularity in Fiji, given distributed solar PV’s
positive impact through reducing transmission
and distribution losses, lowering the need for
fossil fuel in power generation, enhancing energy
security and leveraging significant investment
from the private sector. Distributed solar PV
systems work well with pumped storage.
Grid-connected solar power has considerable
potential. Mobilising this, however, require
enabling conditions. For instance, a net
metering arrangement or viable feed-in tariffs
could unleash a boom in privately financed
solar generation, with private households to
participating in roof- mounted PV generation.
The favourable generation cost of solar PV
has allowed commercial investors, mainly in
the tourism industry, to install roof-mounted
solar to partially generate their own electricity.
Without a net metering framework or a viable
feed-in tariff, only those FEA clients with a
high and stable daytime load can achieve
commercial viability with such investments.
3. Grid-based power/biomass-fuelled generation:
Fiji has a wide range of feedstock, including
bagasse from the sugar industry and forestry
residues such as sawdust and wood chips,
which have been already been used for
generating power and heat. Fiji is also looking into other biomass resources,
including waste-to-energy in particular. A study
for waste-to-energy by the United Nations
Development Programme (UNDP) in 2014,
conducted assessed the amount and type of
resources available, covering municipal solid waste,
wastewater, livestock waste, non-hazardous
industrial organic waste, and agricultural residues.
Scaling up such applications would also help
to address the environmental challenges of
population growth, rapid urbanisation and
changing consumption patterns.
4. Off-grid rural power supply / solar energy:
Off-grid solar PV systems have been installed
in Fiji since the 1980s. Given the significant
decline of system costs and the continued
advancement of the technology, solar PV has
become the DoE’s preferred rural electrification
option for areas without grid access. The Fiji DoE
has supported the installation of approximately
600 mini-grids powered by diesel engines in
the power range of 5-35 kilovolt-amps (kVA).
Most of the existing mini-grid diesel generation
capacity is non-operational or underperforming,
partly because of poor maintenance. Hybridisation could relieve villagers from the
burden of high operation and maintenance
(O&M) and volatile fuel costs. Existing mini‑grids
could be made more environmentally and
economically sustainable through hybridisation
with solar PV systems with battery storage.
Solar hybridisation of diesel grids should be
undertaken in the framework of the rural
electrification master plan, with analysis to
determine the optimal ratios of diesel to solar
PV generation in various settings.
5. More efficient vessels/renewable power
for maritime transport: Maritime transport,
accounting for about 22% of fossil-fuel use in
Fiji, has attracted attention as a sector where
significant quantities of fuels could be conserved
through new technologies and processes.
Regional organisations such as the Secretariat
of the Pacific Community (SPC) and research
institutes such as University of the South Pacific
(USP) are looking into different options for
fuelling maritime transport with renewables.
However, USP and SPC hold different views
with regard to renewable-assisted maritime
transport. A common strategy is needed for
investments in renewables in the maritime
sector.
Recommendations
Based on the service-resource pairs identified, the
following are recommended as priority actions:
• The Government of Fiji is urged to endorse
and implement the draft NEP 2014 as quickly
as possible. Endorsement would reduce
uncertainty and risk in the eyes of prospective
energy sector investors and lenders.
• Efforts should be focused on creating an
enabling environment to attract private sector
investment to the renewable energy sector. This
should start with the removal of uncertainty for
prospective investors and their lenders.
• Key legislation should be reviewed and
harmonised in order to improve the legal
framework for renewable energy development.
Changes could include removing conflicts of
interest in regulation.
• As suggested by prospective investors, a
Renewable Energy Investors Association should
be formed, as private sector participation in
renewable energy development requires a
stronger voice.
• Coordination among Fijian government
ministries on rural electrification should be
facilitated through the establishment of a
National Energy Coordination Committee and
the restructuring of roles and responsibilities,
as suggested by the draft NEP, 2014. Effective
inter-ministerial coordination is crucial to
meet targets set out in the draft NEP 2014 and
associated Strategic Action Plan. Additionally,
there is a need for inter-donor coordination.
Donors interested in active engagement could
formulate a consortium to support the Fijian
DoE in developing the rural electrification
master plan.
• The potential for renewable-powered maritime
transport requires further study. Knowledgesharing with like-minded islands, such as
Tonga, should be encouraged. About 20%
of Fiji’s imported fuel is used for maritime
transportation. Widespread biofuel adoption
would depend upon feedstock availability,
management and production in comparison
with the cost of imported fuels.
• Geothermal energy development, deserves
its own regulatory framework. This could
include more detailed and specific regulations
highlighting benefits as well as risks for such
investments.
• Drilling risks for geothermal energy projects
need to be minimised. Some risk mitigation
mechanisms are available. A geothermal
development risk mitigation fund ought to
be developed with support from multilateral
development banks, such as the World Bank
and ADB. A local fund management unit/office
should be established to ensure that the fund is
properly managed.
Renewables Readiness Assessment XIII
GCPV and solar water heater
Photo: Government of Fiji
XIV Fiji
I. INTRODUCTION
1.1 COUNTRY BACKGROUND: ECONOMY AND ENERGY
Fiji is a large tropical island country in the South Pacific Ocean, with a population
of 881,000 and a land area of more than 18,000 square kilometres (UNdata, n.d.).
Amongst 332 islands, nearly one-third are inhabitable, but the two largest islands
– Viti Levu and Vanua Levu – accommodate about 70% of Fiji’s total population
and account for 87% of the total area (Secretariat of the Pacific Community (SPC),
2008), as shown in Figure 1.
Figure 1: Population Density by Province
Source: www.spc.int/prism/fiji/index.php/1996-pop-gis-maps/47-census-and-surveys/population-census
The boundaries and names shown on this map do not imply any official endorsement or acceptance
by IRENA.
Fiji is classified as an upper middle income country1 by the World Bank (n.d.) and
represents one of the most developed economies in the Pacific Island region. As
shown in Figure 2, Fiji has recorded an average annual gross domestic product (GDP)
growth rate of about 2% over the past 25 years, despite volatile economic performance.
Although Fiji’s GDP growth rates over the period 2006 - 2012 have been well below
the government’s target of 5% (Asian Development Bank (ADB), 2013), the trend since
2010 has been upward, thanks to the effective reform measures taken between 2006
and 2014, which included introducing competition to the telecommunications market
and customary land-leasing business. These reforms, along with substantial tax cuts
and other fiscal stimuli, offered a much-needed driving force to economic growth
(The Economist Intelligence Unit, 2012). In addition, ongoing structural changes in the
economy indicate a shift of economic drivers from the conventional sectors, such as
agriculture, forestry and fisheries, towards manufacturing, mining,2 construction and
tourism, thereby driving up investments in these sectors. For example, new lending
for investments doubled in 2013 to meet the demand for capital in the developing
construction and real estate sectors, and the government invested 30% more than the
previous year in upgrading the road systems.
1
Per capita GDP in 2013 was USD 4,572, while the GDP amounted to just above USD 4 billion for the same year.
Such as bauxite mining in Nawailevu in Bua, the Namosi copper mine project, and other smaller gold
mining projects, in Mount Kasi, Wainivesi and Tuvatu.
2
Renewables Readiness Assessment
1
Figure 2: Fiji’s GDP Annual Growth Rates (1988-2013)
Source: based on World Bank data; http://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG?page=5
The Government of Fiji raised its projection for
GDP growth rate in 2014 to 3.8%, an increase of
nearly 1% from previous estimates, and set 2.4% as
a target growth rate for 2015 (Reserve Bank of Fiji
(RBF), 2014). Asian Development Bank (ADB) and
World Bank projections remain unchanged, at 2.8%
and 3% for 2014 and 2015 (ADB) and 2.4% for both
2014 and 2015 (ADB, 2014; World Bank, n.d.).
On the other hand, the emerging industrial sectors
mentioned above, such as manufacturing, mining
and construction, are energy-intensive. Should the
pipeline projects in those sectors be developed
and come to operation, it would have significant
implication for Fiji’s energy sector. However, Fiji has
underperformed in attracting private investments,3
particularly in the energy sector, where private
sector investment could not be easily mobilised.
Although private investment overall started to
pick up in 2013, private investment in utility-scale
projects remained minimal. There was no private
investment in large-scale power projects feeding
into the national electricity grid. Private investors
were involved in projects to create: grid-connected
solar photovoltaic (PV) systems up to 200 kW;
the Fiji Sugar Corporation’s (FSC) 10 MW biomass
plant; and another 10 MW biomass plan. However,
the investment framework for private participation
in renewable energy projects clearly needs
improvement.
As described above, the economic growth has been
fuelled largely by public investment in industrial
3
sectors and the growing levels of economic activity
from, for example, the growing number of tourists
in Fiji. Therefore, the employment opportunities are
concentrated in the public sector or subsistence
activities, mostly in urban areas.
However, over the past 15 years, urbanisation has
been slow, showing only 8% increase over that time
span, from 47% living in urban areas in 1998 to 53%
in 2013 (FAOSTAT, n.d.; UNdata, n.d.). From 1998
to 2008, Fiji’s population has grown at an average
annual rate of 0.5%, while from 2008 to 2013 the
rate was close to 1%. The labour force experienced
a much higher growth rate, comparatively, as
shown in Figure 3. According to the latest findings
from the International Monetary Fund (IMF) and
the data from the World Bank, the unemployment
rate has remained steady at around 8-9% (Trading
Economics, 2015).4 ADB reckoned that the
economic growth has to be strong enough to
absorb about 20,000 new entrants annually into
the labour market (ADB, 2014). Given this reality,
job creation remains an important task on the
governmental agenda.
Poverty is still considered a serious development
issue in Fiji; 31% of the population was under the
poverty line in 2011 (World Bank, 2011), compared
with 35% in 2003. Reductions in poverty took
place mostly in urban areas (declining from 28%
to 19%), while rural areas showed an increase in
poverty, from 40% to 43%, during the same period
(Fiji Bureau of Statistics, 2012a). The imbalance
Total investment as a percentage of GDP was 15.6% over the period 2006 - 2012, 10% lower than the government target of 25% (ADB, 2013).
The unemployment rate measures the number of people actively looking for a job as a percentage of the labour force.
4
2
Fiji
Figure 3: Comparison of Annual Growth Rates
between urban and rural areas is attributed
to a decline in agricultural activities and to
underdeveloped infrastructure (Government of
Fiji, 2014). It is also reflected in marked differences
in access to electricity and modern fuels. The
electrification rate has continued to improve over
the years, however, due to the Rural Electrification
Programme of the Government of Fiji. Currently,
the electrification rate is around 96% in urban and
82% in rural areas, according to the 2007 Census
(Fiji Bureau of Statistics, 2012b).
In this context, there is clearly an urgent need for
creating more opportunities for private sector
engagements and for the rural population, in order
to help the country continue its economic growth,
reduce poverty and promote more inclusive
growth. Towards this end, developing a sustainable,
reliable and affordable energy sector will allow for
economic growth and enhanced energy security,
particularly within rural regions of the country.
Over the years since the first National Energy Policy
(NEP) was established in 2006, Fiji’s energy sector
has developed significantly but also encountered
new challenges, including rising expenditures
on fuel imports when global oil prices surged, as
well as the continued risk of volatility, entailing
a policy challenge even as oil prices receded in
2014‑2015 The dependency on imported fuel has
been identified as one of the key challenges that
Fiji has to address to ensure continued social
development and economic growth. In 2013, the
government commissioned the draft of an updated
energy policy (NEP, 2014), along with its associated
Strategic Action Plan. In comparison to the NEP
2006, the draft NEP 2014, not only includes
policy objectives, but also set specific targets
for 2015, 2020 and 2030, respectively, which are
closely aligned with the Sustainable Energy for
All (SE4ALL) initiative of the United Nations. In
tandem with development of the draft NEP 2014,
a Strategic Action Plan was drafted, in which five
strategic policy interventions for renewable energy
development were identified.
Achieving these energy targets requires not only
identifying strategic areas but, more importantly,
a list of articulated key actions and a portfolio of
renewable energy projects that can be successfully
implemented. To make these goals attainable, a
comprehensive assessment of the current status of
renewable energy development and the key issues
that need to be addressed is essential.
Against this backdrop, the Renewables Readiness
Assessment (RRA) was launched and implemented
by the Fiji Department of Energy (DoE) and the
International Renewable Energy Agency (IRENA). As
part of the RRA study, consultancy work was carried
out by an independent consultant and facilitated by the
DoE to collect data and conduct interviews. This was
followed by an RRA multi-stakeholder consultation
workshop, at which the pre-identified issues were
discussed and the key findings were verified.
The remainder of this report describes the RRA
process, presents the current development status of
the renewable energy sector, highlights the key issues
to be addressed in order for the country to scale up
the deployment of renewable energy in the future
and provides a list of recommended actions that
could be undertaken in close collaboration with other
stakeholders, including the relevant donor agencies.
Renewables Readiness Assessment
3
1.2 RENEWABLES READINESS
ASSESSMENT (RRA) PROCESS IN FIJI
The RRA for Fiji furthers the discussion around the
renewables-related issues highlighted in Fiji’s energy
policy review, and thereby contributes to fine-tuning
Fiji’s future renewable energy policy and identifies
key actions to mobilise necessary resources.
More specifically, the RRA aims to:
• Improve the understanding on the current status of
renewable energy development in Fiji by conducting
a comprehensive review of the sub-sector;
• Identify and analyse the critical and emerging
issues associated with and arising from the
development of Fiji’s energy sector in general
and the utilisation of renewable energy
resources in particular;
• Present the various opportunities for scaling
up renewable energy development and
deployment in Fiji while at the same time
discussing the main barriers to developing an
enabling environment to allow implementation
of draft NEP 2014, in order for those
opportunities to be realised;
• Put forth a portfolio of articulated actionable
initiatives – developed jointly by participating
stakeholders – that can capitalise on the
renewable energy development opportunities
revealed through examination of Fiji’s renewable
energy sub-sector and extensive discussions
with multiple stakeholders;
• Outline the follow-up steps to ensure the
actions identified can be carried out within the
near- and mid-term timeframe.
4
Fiji
In Fiji, the RRA process was led by the Fiji DoE, in close
collaboration with the IRENA RRA team. Building
on key findings of the Fiji energy policy review, a
background paper was developed and circulated
amongst the most relevant stakeholders for an
effective multi-stakeholder consultation process.
Interviews were conducted before and during
the RRA workshop to gain different perspectives
on the pre-identified issues and seek the advice
and thoughts of stakeholders on how to tackle
those issues. This is an important complementary
function in the methodology, to gain in-depth
insight, particularly from those at the frontlines who
were unable to participate in the RRA workshop.
An RRA consultation workshop was organised
in March 2014 in Suva, Fiji. It was based on
a broad, inclusive consultation process that
involved all key stakeholders – public institutions
(including key ministries and national energy
authorities and agencies), the private sector,
non-governmental organisations, multilateral and
bilateral funding agencies, development partners,
civil society representatives and members of
academia, as well as senior representatives of
IRENA. This not only ensured synergies, but, more
significantly, facilitated harmonisation among the
stakeholders involved in order to help deliver Fiji’s
goals.
The RRA outcome presented here draws on the
development process for the draft NEP 2014 and
the associated analytical work for the SE4ALL and
Legislative Gap Analysis reports. Although the
RRA ensures that its analysis is consistent with
these documents, it aims to provide guidance
to the Government of Fiji for concrete actions in
selected priority areas.
II. ENERGY SECTOR AND RENEWABLE ENERGY
2.1 FIJI’S KEY ENERGY CHALLENGES
Like other Pacific Island countries, Fiji is substantially dependent upon imported
petroleum-based fuels. The fluctuation of the global oil supply affects not only
the country’s energy security but also energy prices. Fiji was historically hit twice
by the shortage of oil supply caused by two energy crises in the 1970s – the
Organisation for Economic Cooperation and Development (OECD) embargo and
the Iranian revolution, which accounted for an average 8% increase in the price of
energy – and the Iraq war in 2003, which caused an average 6.6% increase over
2001-2005 prices (Kumar, 2011).
Global oil prices have been volatile and rose substantially in 2004-2008,
resulting in a drastic increase of Fiji’s energy expenditures. Fiji spent as much as
FJD 744 million on fuel importation in 2008,5 accounting for 34% of total
merchandise imports (Asian and Pacific Centre for Transfer of Technology — United
Nations Economic and Social Commission for Asia and Pacific (APCTT-UNESCAP),
2010; World Bank data — fuel imports, especially the percentage of merchandise
imports) or 17% of its GDP, compared with 7% in 2003 (Fiji Islands Bureau of
Statistics, various years; RBF, various years). Fiji’s total US dollar expenditures on
imported fuels has been far above that of other Pacific Island countries, given the
scale of its economy and, consequently, greater reliance on imported oils.
Interestingly, spending on imported fuels did not decline significantly, but
remained as high as FJD 550 million or more annually in 2008-2011, despite the
drop in oil price by about one-third from the record high (Saula, 2012). The ratio of
fuel imports to total merchandise imports since 2006 has remained close to 30%,6
except for a slight dip in 2009, as illustrated in Figure 4.
Figure 4: Ratio of Fuel Imports to Total Merchandise Imports (2004-2012)
Source: World Bank Data, accessible at http://data.worldbank.org/indicator/TM.VAL.FUEL.ZS.UN
The challenges arising from volatile and comparatively high oil prices will remain
huge if business continues as usual. The country’s specific challenges would become
even more pronounced if economic growth accelerates faster than expected.
5
Equivalent to FJD 1.2 billion at the currency exchange rate of USD 0.62/1 FJD (2008).
Putting it into perspective, it was close to that range during the period when Fiji was hit by the first
global oil crisis, in 1973, i.e. 28% at annual cost of FJD 10 million (World Bank, 1978).
6
Renewables Readiness Assessment
5
2.2 FINAL ENERGY CONSUMPTION
In Fiji, the transport and industrial sectors have
dominated the country’s energy usage. The
transport sector7 had been the largest energy
consumer, accounting for more than half of the
total consumption, until 1999, when final energy
consumption by the industrial sector grew
by more than 50%, mainly due to the strong
growth in such major industries as agriculture,
tourism, manufacturing, construction, and mining
and quarrying. However, the transport sector
consumes 64% (land 16%, air 26% and marine 22%
respectively) of the total of imported petroleum,
thus remaining the top consumer of petroleum
products, according to Fiji Bureau of Statistics.
The energy consumption by the residential sector
has been growing slowly over the 30 years from
1990-2010. This sector is starting to become a
key driver for energy demand due to growing
electricity consumption by households.
Figure 5 illustrates the strong growth in energy
consumption from 2001 to 2005, which showed
a 3% annual growth rate, tripling the average
rate over the period 1991-2000. This means these
five years have been, on average, the highest in
energy elasticity8 since 1970. The same period
also experienced the second highest annual
increase in energy prices, at 6.6%, owing partly
to the oil supply disruption caused by the Iraq
war in 2003. Consequently given the increase in
oil prices starting in 2004, keeping GDP growing
with the same level of energy elasticity was not
only difficult but irrational. This could partially
explain why energy consumption turned
downwards in 2005.
Figure 5: Fiji’s Final Energy Consumption by Sector (1990-2010)
Based on: United Nations Statistics Division (UNSD), 2011.
As economic activity has picked up considerably
over the last two years and is likely to continue
the upward trend, energy demand is likely to
increase for both petroleum-based fossil fuels
and electricity. Furthermore, it has been widely
acknowledged that the mining industry could be a
key driver for Fiji’s future energy demand, although
recent energy consumption from the mining
industry has remained largely unchanged.
However, it should be noted that the current
understanding of final energy consumption
was based on data that might not be accurate
and verifiable. Acquiring reliable disaggregated
energy consumption data has been a challenge,
as described in the report entitled SE4ALL
Rapid Assessment and Gap Analysis, which was
published in 2014 by the Government of Fiji.
7
Submission of transparent and systematic energy
consumption data has yet to be established.
The SPC, in collaboration with other likeminded partners, such as the Fiji DoE, has been
endeavouring to develop a Pacific Regional
Data Repository aimed at “supporting Pacific
governments and their development partners
working in the energy sector by facilitating access
to up-to-date, reliable energy data and project
information.”9 Before that Data Repository is
fully established and functional, estimation is
one common approach applied in most Pacific
countries when actual statistical data cannot be
made available, as is the case in Fiji.
When it comes to rural off-grid electricity,
consumption has been low, mainly due to
constraints presented by the combined lack of
The coverage includes road, marine and aviation users.
It is usually considered to be high when it exceeds 1. It was 1.26 over the period 2001-2005 (Kumar, 2011).
9
Quote from website, Pacific Regional Data Repository (PRDR) for SE4ALL (http://prdrse4all.spc.int/prdrse4all/).
8
6
Fiji
availability of technologies, demand and affordability.
In rural Vanua Levu and Ovalau, average annual per
capita electricity consumption has been as low as
290 kilowatt-hours (kWh) and 260 kWh, respectively.
The solar home systems that were installed under
DoE’s rural electrification scheme were in the range
of 100,135 watts (W) until 2010, while more recent
ones had capacity of 270 W, enough to satisfy an
average demand of approximately 1 kWh per day.
Electricity consumption in the areas that are
covered by diesel-powered mini-grids has also
been constrained, primarily by limited supply hours.
Such schemes typically operate for only about 4-6
hours a day due to the high fuel costs,10 and are used
mostly to provide lighting in the evening hours.
These restrictions severely constrain productive
use of electricity, as commercial demand (e.g.
workshops, retail) typically occurs during the
daytime. For most of the more than 600 mini-grids
in Fiji, there is very little operational data available.
The study on the rural diesel mini-grid schemes
on Rotuma Island undertaken by South Pacific
Applied Geoscience Commission (SOPAC), part
of the Secretariat of Pacific Community in 2007
revealed that the average electricity consumption
in rural mini-grids is below 1 kWh per day per
household.11
2.3 ENERGY DEMAND OUTLOOK12
The extent to which future energy demand
is correlated to GDP growth has significant
implications for forecasting energy demand.13
Based on the analysis of relevant data from 1970
to 2005, Kumar (2011) concluded that for Fiji “….in
the short-run, there is causality running from
GDP to energy consumption….” suggesting that
GDP growth causes the increase of future energy
demand. This result is in line with findings of Huang,
Hwang and Yang (2008),14 showing that economic
growth leads to greater energy consumption for
lower and upper middle income countries.15
As predicted by ADB, the World Bank and
RBF,
the
short-term
economic
growth
looks positive. Future demand for electricity
in
the
main
Fiji
Electricity
Authority
(FEA) grids was predicted to grow, according to
FEA’s Power Development Plan of 2011, for both peak
demand and energy. For the period between 2011 and
2014, an annual growth rate of 7% was forecast, based
on 100% electrification in 2015. Growth by 3% annually
was estimated between 2015 and 2020, based on
annual population growth of 0.8% and accelerated
economic growth (FEA, 2011). Accordingly, total
electricity and peak load demand are expected
to reach 1,352 gigawatt-hour (GWh) and 256 MW,
respectively, in 2020.
FEA has recently revised these forecasts in light of
the flat demands observed in the past years. In the
revised forecast, demand remains flat, reaching just
850 GWh in 2015, shown in Figure 6, which is 26%
lower than projected in the Power Development
Plan of 2011. The significant discrepancy between
the two forecasts underlines the great uncertainties
Figure 6: FEA’s Projection for Supply-Demand Balance (new solar units excluded)
Source: SE4ALL Rapid Assessment and Gap Analysis Report, 2014
10
The cost of generating electricity is approximately USD 1.13/kWh.
With an average total daily demand of 450 kWh per day, a total island population of 2,400 and average household size of 5, average
household demand on this island — which is served by 20 isolated mini- grids for a total installed capacity of 472.5 kilovolt-amps
(kVA) — has been found to be 0.95 kWh per day (SOPAC, 2007)
12
The outlooks of Fiji’s future energy demand presented in this section were charted by APEC and ADB, and FEA, respectively, in
independent studies.
13
Although the IEA mentioned in its World Energy Outlook, 2013 that the relationship between these two variables was observed to
be weakening in many countries and regions (IEA, 2013), many studies in the literature revealed the causality was dependent upon
such factors as the methodologies and approaches used for analysis, the level of income of the studied nation, and the time horizon –
i.e. a short or long term (Campo and Sarmiento, 2013).
14
The study results were based on analysis of GDP and energy consumption data from 82 countries over 1972-2008.
15
Based on World Bank categorisation.
11
Renewables Readiness Assessment
7
in energy demand projections for Fiji. The lack of
accurate energy-related data that are required for
developing an energy demand outlook is one critical
contributor to the problem. On the other hand, the
small scale of the energy system operated by FEA can
easily be affected by a single event such as a cyclone
or a large- scale industrial investment and this can lead
to overestimating or underestimating future demand.
Figure 7: Electricity Tariff Rates (2010)
Source: Final Determination on Electricity Tariff Rates, FEA, 2012.
Continued efforts in demand-side management,
along with consumer reactions to tariff increases,
may also exert significant impact on energy
demand trends. The electricity tariff in Fiji is
relatively low compared to the other Pacific Island
countries, including Australia and New Zealand, as
shown in Figure 7. According to Kumar (2011), the
energy price elasticity in Fiji over 1990-2005 was
around -0.3%, implying 0.3% decrease in energy
consumption for each 1% increase in energy
prices. In addition to the low electricity tariff, the
Government of Fiji has also announced an increase
in the level of subsidised household annual
electricity consumption from 75 kWh to 85 kWh as
part of the President’s address at the recent new
Parliament Sitting.
Fiji’s longer-term (to 2035) energy demand outlook
was presented in the Energy Outlook for Asia and
the Pacific published by Asia Pacific Economic
Cooperation (APEC) and ADB in 2013. The Outlook
stressed the challenge of meeting the growing
energy demand while at the same time reducing the
reliance on imported fuels. Effectiveness of measures
taken to address these challenges depends upon
the scale of development of indigenous energy
resources — i.e. renewable energies — and also upon
the measures taken to improve energy savings.
Two cases were developed, using the same set of
basic assumptions for the growth of population
and GDP through 2035, from the reference year
of 2010. Annual GDP growth rate was assumed to
16
8
ktoe: thousand tonne of oil equivalent
Fiji
be 1.4%, about half of the 3% estimated by FEA,
and population growth rate to be 0.5%, also much
slower than FEA’s estimates.
In the Business-as-Usual case, the primary energy
demand of Fiji was projected to increase from
600 ktoe16 in 2010 to 900 ktoe in 2035, growing at
an annual rate of 1.3%. In the alternative case, Fiji’s
primary energy demand was estimated to increase
at an annual rate of 1.2% through 2035. According
to this growth projection, Fiji’s primary energy
demand would reach 870 ktoe in 2035, 3.3% lower
than in the Business-as-Usual case. Details can be
found in the above-mentioned report.
The eventual trajectory of the energy demand
will depend on many factors, including the GDP
growth rates and the policy choices made by the
Government of Fiji over the coming years.
2.4 ENERGY SUPPLY
In Fiji, there was a small amount of coal in the energy
mix until 2005. Today, the primary energy supply
in Fiji is dominated by petroleum, biomass and
hydrological energy resources. Petroleum-based
fuels are imported, while biomass and hydrological
energy are indigenous. There are two categories
of imported petroleum-based fuels — re-exported
fuel and fuel used by international bunkers — that
fall beyond the coverage of total primary energy
supply and are therefore not shown in Figure 8.
In 2010, Fiji imported a total of approximately
860 million litres of petroleum-based fuels; about
40% of this was consumed by international bunkers
and re-exported to smaller Pacific Island states.
Figure 8 illustrates a trend that, over the time span of
20 years, biomass has been giving way to petroleum
in Fiji’s total primary energy mix. This indicates that
cooking fuels were being modernised, given that
the majority of biomass was used as firewood for
cooking in rural areas. However, some 70% of rural
households were still relying on firewood as the
main cooking fuel, according to the 2007 Census
conducted by Fiji’s Bureau of Statistics (2012b).
Figure 8: Fiji’s Total Energy Consumption (1990-2010)
Source: UNSD (2011); IRENA based on UNSD
Petroleum-based fuels in Fiji cover motor spirits
(gasoline), aviation diesel and industrial diesel oil17
for electricity generation. However, breakdown
data are difficult to obtain and verification of data
accuracy is challenging.
2.5 SUPPLY OF ELECTRIC POWER
Electricity is provided through two means – the
electric power grids (including local community-run
micro-grids in rural areas and micro-grids installed at
the governmental facilities) and stand-alone power
generation systems, such as diesel gensets and solar
home systems providing basic electrification. Four
independent grid systems on three islands, depicted
in Figure 9, are operated by FEA, while Fiji DoE is
responsible for rural electrification.
The total installed power generation capacity is
269 MW, 94% of which was run by FEA, delivering
857 GWh in 201318 (FEA, 2014).
FEA’s grids accommodated a total installed
generation capacity of 254 MW by 2013, which is
30% higher than had been projected in the 2010
FEA Power Development Plan for Fiji (2011-2020).
FEA’s current generation fleet is composed of
about 55% hydro, 40% diesel and heavy fuel oil,
and 1% wind, with the remaining 4% supplied by the
co-generators, Tropik Woods and FSC. To further
reduce the environmental impact of its energy
generation portfolio, FEA would like to replace
retired diesel gensets with renewable energy
options, if available; for this reason, FEA is looking
for potential independent power producers (IPPs)
that can provide alternative options including
hydro, geothermal, wind, biomass and solar farm.
On the main island of Viti Levu, as presented
in the breakdown in Table 1 and Figure 9, FEA’s
power infrastructure is essentially characterised
by the larger hydropower plants, whose generated
electricity is transmitted via two major 132-kV
lines, connecting Wailoa with Vuda in the Western
17
Interchangeable with diesel in this report, unless otherwise specified.
Financial year ending on 31 December, 2013.
18
Renewables Readiness Assessment
9
Figure 9: FEA Service Supply Areas in Fiji
Source: FEA
The boundaries and names shown on this map do not imply any official endorsement or acceptance by IRENA.
region and Wailoa with Cunningham Road in the
Central region, feeding 33-kV and 11-kV distribution
networks. The 33-kV lines are still feeder lines into
the individual supply areas in the Western and
Central regions and do not yet form a circular
system around the coast of the main island.
The smaller systems in Vanua Levu are 33-kV
transmission systems that cover only the most
densely populated areas around the towns of
Labasa and Savusavu, which are planned to be
10 Fiji
interconnected in the near future to provide more
flexibilityandreliabilityofsupply.Thepowerdevelopment
plan even considers an interconnection between the
two major islands via a 132-kV undersea cable, which
would only be justified if a major geothermal capacity
(on the order of 50-100 MW) is developed in
Vanua Levu. The small system of Ovalau uses
11-kV as distribution voltage. Interconnecting
Ovalau with the main system on Viti Levu has
also been considered, although no concrete plans
exist yet.
Table 1: FEA’s Installed Electricity Generation Capacity
Location/site
Installed Capacity
(MW)
Energy
Source
Nameplate
Output
Year of
Commission
60% of the
electricity in
Viti Levu
1983
101 GWh19
2012
Viti Levu Island
Monasavu Wailoa
83
Nadarivatu
42
Wainikasou
6.6
18 GWh
2004
Nagado/Vaturu
2.3
10 GWh
2006
Buton
10
Wind
-
2007
72 (total)
Industrial Diesel Oil
-
20.6
Heavy Fuel Oil
-
2007
-
-
-
-
-
-
Distribution
network 11 kV
and below
-
Multi-locations
Kinoya
Hydro
Vanua Levu Island
Labasa
13.5
Savusavu
5.2
Wainiqeu
0.8
Industrial Diesel Oil
Micro-hydro
Ovalau Island
Levuka
2.9
Industrial Diesel Oil
Total Installed Generation Capacity
258.9 MW
Source: FEA Power Development Plan, FEA Presentation Energy Forum 2013
Hydropower accounts for the biggest share of Fiji’s
electricity supply mix. On one hand, this enhances
the security of energy supply. On the other hand, it
exposes the power system to seasonable variation
of annual hydrological cycles and extreme weather
events, such as El Niño, El Niño Southern Oscillation
or severe drought, and thus hydropower faces
a challenge to provide reliable power.20 More
specifically, Fiji has distinct wet and dry seasons,
and eight months of the year (May to December)
are often deficient in precipitation, particularly in
the dry zone on the north western sides of the
main islands. For instance, the poor rainfall in the
Monasavu catchment in 2013 and 2014 resulted in
critically low water levels at the Monasavu dam.
From a technical perspective, having more
renewable sources in the power system can
be achieved. The results of supply-demand
modelling that was run for the development of
the draft NEP 2014, have shown that it is feasible
to have more than 80% of electricity supplied
through renewable energy sources by 2020 and
100% by 2030. Achieving these targets would
require: 1) a strong enabling environment for the
key stakeholders, including private sectors, to be
actively engaged; and 2) risk-sharing/mitigation
mechanisms for geothermal energy, due to the
high costs and risks associated with geothermal
exploratory drilling.
To this end, if non-hydro renewable energy sources,
such as solar, wind and geothermal energy can be
scaled up, it would effectively expand the portfolio
of Fiji’s electricity generation capacity and thus
enhance its energy security. Given the high costs of
fossil fuel and continued reduction in the costs of
renewable electricity generation, this ought to be
an economically attractive option (IRENA, 2013).
2.6 RENEWABLE ELECTRICITY
Fiji is well endowed with a broad mix of renewable
energy resources, including hydro, solar,
biomass, wind and geothermal energy. However,
the exact potential of renewable energy has
yet to be fully assessed and made publicly
available.
19
98.6 GWh in 2013 (FEA, 2014)
www.pacificwater.org__resources_article_files_Fiji
20
Renewables Readiness Assessment
11
Grid-connected renewable electricity development
is generally under the jurisdiction of FEA, while the
Fiji DoE is responsible for off-grid systems, although
the DoE has also piloted 60 grid-connected solar
PV systems of 1.2 kW and 2.4 kW capacity in
government quarters around the country. FEA has
embraced the strategy of developing renewables
to replace diesel in its generation capacity portfolio.
After FEA failed to achieve its original target —
90% of the electricity generated from renewable
energy sources by 2011 (FEA, 2007) — it endorsed
the target of 81% by 2020 that was recently set in
SE4ALL and proposed in the draft NEP 2014. While
traditionally hydro resources have been the focus
for power generation, other non-hydro resources
for renewable electricity need to be capitalised.
institutional/government and most commercial
and industrial businesses are located – suggesting
a potential growth of load demand. Amongst the
supply areas, Central Viti Levu was ranked at the
top in terms of per capita electricity consumption,
at the level of 1,170 kWh/year, followed by Western
Viti Levu, with 800 kWh/year.
Grid-connected hydropower
Small hydro22
During the wet season from November to April,
which also happens to coincide with the tropical
cyclone season, the level of precipitation is usually
high, especially over the larger islands in Fiji,
where the level of rainfall can reach as high as
6,000 millimetres (mm), accounting for up to 80%
of the annual total rainfall (Global Environmental
Facility (GEF), 2009). This provides Fiji with an
estimated technical hydropower potential of
1 terawatt-hour per year (TWh/year), of which only
a bit more than one-third (36%) has been developed
(International Journal on Hydropower and Dams,
2011; United Nations Industrial Development
Organization (UNIDO) and International Centre on
Small Hydro Power (ICSHP), 2013).
The exploitable hydropower potential in Fiji’s main
islands is estimated at around 220 MW,21 out of which
62% has been materialised by four hydropower
schemes identified by FEA in the long-term strategy
developed in the early 1970s, including the recently
commissioned 40 MW Nadarivatu hydropower
scheme — the 2nd largest in Fiji — which was
operating in full swing in 2013, delivering 98% of its
designed electricity production output (FEA, 2014).
The rest of hydropower’s exploitable potential is
on track for being developed, along with projects
already in the pipeline that are being implemented.
Around 80 MW of exploitable hydropower potential
is located in Viti Levu Island. This is where the
largest portion of the population resides and where
21
Given that the generation cost of electricity from
hydropower is in most cases cheaper than dieselgenerated electricity, FEA is motivated to look into
other potential areas, including lower Ba, lower Wailoa
and Navua, to find suitable sites for hydropower
generation. IPPs are encouraged to submit business
proposals for investing and developing large
hydropower schemes under certain arrangements.
Although Fiji’s first small hydropower plant was
built as early as the 1920s (UNIDO and ICSHP,
2013), there is no comprehensive survey of smallscale hydropower (<1,000 kW) in Fiji. Seven small
hydro systems have been installed in the 1980s
and 1990s to supply village mini-grids with a total
generation capacity of 957 kW. The Wainiqeu
(Vanua Levu) and Bukuya (Viti Levu) took the vast
share with 800 kW and 100 kW, respectively. More
recent rural installations include a 25 kW hydro
power facility at Buca Village, Cakaudrove.
The experience of hydropower plant operations
presented a mixed picture. The DoE reports
that the operations are encumbered with
technical problems (equipment break downs,
sedimentation), which are exacerbated by difficult
site access and lack of technical expertise amongst
the villagers who are in charge of plant operation.
The challenges also include poor management and
inadequate community leadership.
Currently, the DoE monitors the hydrology of
several sites as part of the hydro survey that is being
conducted across the country. Of the sites, Kadavu,
Taveuni, Serua and Vanua Levu could support
village electrification schemes totalling about
300 kW, accounting for 60% of the combined
500 kW potential estimated by Fiji DoE. There are
several sites already surveyed, which are awaiting
detailed design, and others currently undergoing
monitoring.
Calculation based on the Pilot Study for Comprehensive Renewable Energy Power Development, Tokyo Electric Power Company
for Japan Bank for International Cooperation (JBIC), 2010; and FEA Power Development Plan. This range would be likely expanded as
investigation progresses on new sites.
22
There is no specific definition of “small hydro,” although an installed capacity of 10 MW and above is usually considered large-scale
hydro. For Fiji, micro-hydro refers to schemes with capacities of up to 100 kW, while mini-hydropower has capacities of up to 1,500 kW
(Gonelevu, 2002).
12 Fiji
Biomass energy
Similar to energy from a hydropower plant with a
reservoir, biomass, as stored energy resource, can
be used for meeting base load electricity demand.
As with many developing countries, biomass in Fiji
is used mostly in a traditional way – i.e. as firewood
for cooking – and data on the potential and
traditional uses of biomass are either unavailable
or unreliable. It seems to be the case that the vast
majority of biomass is used in rural areas, although
urban households occasionally use wood to
prepare traditional (lovo23) meals. The best available
estimates have shown that more than 70% of rural
households use wood for cooking purposes.
The Forestry Department of Fiji24 is currently
piloting a programme to assess biomass potential in
order to improve the quality of resource data, which
would help develop a strategy for modernised use
of biomass-based energy resources in Fiji. From the
global biomass carbon map, shown in Figure 10, it
can be seen that Fiji is very rich in biomass resources.
This is largely because of the more than 50% forest
coverage rate and the fact that about 15% of the
total land area is used for agricultural purposes
(FAOSTAT, n.d.; UNdata, n.d.).
Apart from the traditional use for energy purposes,
biomass has also been utilised in a modern way in
Fiji, including direct combustion for steam and power
generation, as well as production of biogas and biofuels.
Combustion for steam and power generation.
Agricultural and forestry waste have been used for
steam and power generation for quite some time
in Fiji. Both FSC (which is majority state-owned)
and Tropik Woods26 (a state-owned enterprise)
operate conventional steam boilers to generate
and process steam and electricity for their own
consumption. Excess power is sold to FEA at the
recently increased rate of FJD 0.3308 kWh, more
than double the previous rate of 0.15/kWh. In 2012,
4% of FEA’s electricity was provided by these two
generators.27
Since 2006, the amount of bagasse has decreased,
following the decline of sugar cane production
in Fiji from 3.2 million tonnes to an estimated
2 million tonnes in 2014 (ADB, 2013). Thanks to the
recent efforts by the Government of Fiji to revitalise
the sugar industry, which are expected to lead to
significantly higher raw sugar production, bagassebased power generation may be more promising
now than it was over the past years. For instance,
development of another 40 MW facility at Rarawai
sugar mill in Ba is underway, alongside an ethanol
production facility with a capacity of 60,000 litres
per day.28
Biogas development29
As early as the mid-1970s, Fijians began to apply
biogas technologies; initially, these technologies
were dominated by a fixed dome biogas digester,
designed as a means to manage animal manure in
remote rural areas (APCTT-UNESCAP, 2010; Tukana,
2005). However, in terms of biogas production, the
results from these early biogas technologies were
mixed. Their failures were caused mainly by poor
design and construction and by lack of knowledge
on operation and maintenance, as pointed out by
Figure 10: Global Living Biomass Carbon Density Map, 2000
Source: Carbon Dioxide Information Analysis Center25
23
Traditional earth oven cooking.
Fiji has a large forest coverage, accounting for more than 50% of the total land area.
25
At http://cdiac.ornl.gov/epubs/ndp/global_carbon/carbon_documentation.html
26
Bagasse and wood residues.
27
The share was low due to the fact that the 9.3 MW wood-fired co-generation plant of Tropik Woods produced only 13% of its contracted
supply value in 2012 because of a major technical issue (FEA, 2012).
28
Limited to the biochemical conversion process (often referring to anaerobic digestion) in this report.
29
This refers to Strengthening the Fiji Biogas Programme – a study for the Department of Energy, Government of Fiji.
24
Renewables Readiness Assessment 13
Tukana (2005). In early 2000s, Fiji’s Department
of Agriculture and DoE have installed a few biodigesters with the Carmatec design made by Mr.
Raedler for dairy and pig farmers in the Central,
Northern and Western divisions. As with earlier
attempts, these yielded mixed results. The positive
element was that the design seemed robust,
although knowledge on how to build, operate and
manage the facilities was clearly lacking, which
contributed to the failure of some units.
In fact, these challenges are experienced typically
in countries that are just beginning to apply biogas
technologies. This is because the technologies and
designs must not only be adapted to local contexts
and conditions, but also well understood by the
users, particularly when households and semicommercial livestock farms are the end-users,
and thus play a critical role in making the installed
biogas facility a success or a failure.
This suggests that Fiji needs to find ways to make
biogas technologies work within Fiji’s particular
context, and not necessarily by reinventing the
wheel, nor with off-the-shelf solutions that can be
used immediately. The assessment of the market
potential to strengthen the Fiji biogas programme
was first reported by a DoE consultant in 2006
and needs to be updated comprehensively. The
Fiji Renewable Energy Power Project is advertising
a consultancy to further study the potential
development of appropriate waste-to-energy
technologies. The focus will also be on biogas
technologies at the household and commercial
scales. Toward this end, Fiji Department of
Environment and FEA plan to undertake a feasibility
study for methane extract from the landfill in
Figure 11: Solar Energy Resource in Fiji
Source: Final Determination on Electricity Tariff Rates, FEA, 2012.
14 Fiji
Naboro, which has already been connected to the
FEA grid. It is estimated that the supply of landfill
gas could be sufficient for a generation capacity of
5 MW.
Biofuels
The DoE supports several biofuel projects as
part of its electrification programme for remote
island communities, which include encouraging
production and blending of coconut oil with diesel.
In addition, potential use of local molasses to
produce ethanol for transport is being investigated
by FSC. DoE’s policy in the biofuel sector
emphasises that further development of biofuels
in Fiji should be based on technical and economic
feasibility, with proper assessment of the associated
risks and a special focus on the trade-offs between
production of crops suitable for conversion to
biofuels and production of food and cash crops.
Although the government has granted significant
tax incentives to private biofuel producers, the only
private company producing biodiesel in Suva has
given up such production to focus on higher-value
coconut oil-based cosmetics.
Solar energy
Fiji’s solar potential varies considerably with
location. While outer islands and coastal areas
in the western parts of the larger islands show
good solar potential, as illustrated in Figure 11,
irradiation levels are seriously reduced by long
periods of cloud cover in the mountain regions of
the larger islands. Measurements at Nadi airport
on Viti Levu’s west coast show a long-term annual
average solar potential of 5.1 kWh/m2/day, peaking
between November and February. In contrast,
long-term records in the Monasavu catchment in
Viti Levu’s interior suggest average solar potential
of 3.7 kWh/m2/day. These values require oversizing
solar installations to meet a given demand (in the
mountainous interior, PV solutions tend to be more
costly per kWh output than at coastal areas and on
outer islands).
At present, there are only a few small grid-connected
solar PV installations. But off-grid solar PV systems
have been used in rural areas to provide basic energy
services, such as lighting, mobile phone charging, use
of electric appliances such as refrigerators, and water
pumps for irrigation. In some cases, solar/pico-hydro
formed a hybrid system that can deliver relatively
more reliable energy services.
Wind energy
To date, detailed and comprehensive assessment of
Fiji’s wind resources is largely unavailable. In 2013,
the DoE commissioned a mesoscale wind mapping
for the two main islands. The assessment was based
on the Mesoscale Compressible Community model
developed by Environment Canada, with sets of
recorded data from four sites used to calibrate
modelling. Wind data at these sites were standard
meteorological data recorded at 10 metres (m),
significantly lower than the typical 80 m hub height
for a wind generator. The model generated a wind
map for the two main islands. While the data
recorded for 10 m provide a first indication, the
derived hub-height data are certainly not investment
grade quality and further on-site measurements at
50 m or higher will be required.
Another source indicating wind potential in Fiji
is NASA’s Solar System Exploration. The data,
presenting monthly distribution of wind speeds (at
50 m above the earth’s surface) over 1993-2005
in seven locations,30 have shown that the annual
average wind speed was at 6.5 metres/ second
(m/s). More importantly, the high-end range of
wind speeds (6.5‑7.2 m/s) for almost all the sites
was during the dry season, from May to October.
(Kumar and Prasad, 2010) This suggests an
opportunity to develop a hybrid system in which
wind and hydropower can complement each other
for enhanced energy security.
Fiji’s only significant wind project is located in
Sigatoka on the southeast coast of Viti Levu. The
10 MW project, known as Butoni and commissioned
in 2007 by FEA, has shown rather disappointing
results. A private sector partner (Pacific Hydro),
who initially developed the project together with
FEA, pulled out in 2003 over its concerns about the
commercial viability of the project. The wind farm
was then built by FEA alone. It consists of 37 Vergnet
275 kW turbines that can be tilted down to avoid
damage from cyclones. Still, in 2012, Cyclone Evan
caused damage to the blades of some of the wind
turbines, even though the wind turbines had been
lowered to the ground in anticipation of the cyclone.
Average output of the wind farm since commissioning,
has only been some 6 GWh per annum, approximately
half of the output predicted by FEA and the supplier
of the turbines during the design phase, resulting in
a much lower than average level of capacity factor.
Key reason for the failure of the Butoni project was
believed to be the lack of a solid wind resource
assessment in the project preparation phase.31
Against the background of the Butoni experience,
it would be advisable to perform a full-scale
evaluation of the factors that caused its poor
performance (e.g. resource assessment, design,
technology selected, procurement, total life
cycle cost and operational performance)
before additional investment in wind projects is
considered.
Geothermal energy
Unlike most of the renewable energy sources,
whose energy is essentially from the sun, the heat
embedded in geothermal energy comes from the
earth. This suggests that geothermal resources
can provide energy in a more reliable, and
probably cheaper, way compared with solar-based
renewable energy sources.
Fiji is part of the “Ring of Fire”32 – a fertile ground
for geothermal energy production. A Geothermal
Energy Association report identified Fiji as one of
the total 39 countries in the world whose electricity
demand can be supplied solely by geothermal
energy (Holm, et al., 2010).
Fiji’s geothermal resources were first studied
in the 1960s, followed by further investigations
triggered by the global energy crisis of the 1980s.
The report (Asmundsson, 2008) entitled South
Pacific Islands Geothermal Energy for Electricity
Production, issued by the Icelandic International
Development Agency (IIDA), highlighted that no
volcanic activity is found on Fiji but there are 40
thermal springs, which originated from extinct
volcanoes and are up to five million years old (from
the Plio-Pleistocene epoch), as shown in Figure 12.
30
Suva, Labasa, Monsasavu, Savusavu, Udu, Nabouwalu, Rakiraki and Lautoka
www.fijitimes.com/story.aspx?id=127996
32
The horseshoe-shaped volcanic belt that stretches from the southern tip of South America, along the coast of North America, across
the Bering Strait, down through Japan and into New Zealand, around the edge of the Pacific Ocean
(source: http://education.nationalgeographic.com/education/encyclopedia/ring-fire/?ar_a=1 )
31
Renewables Readiness Assessment 15
Figure 12: Hot Springs Locations in Fiji
Source: Government of Fiji, 2014
Government of Fiji, 2014. SE4All: Rapid Assessment and Gap Analysis, February, 2014.
Table 2: Fiji’s Geothermal Energy Potential
Location/
Capacity & Output
High Case
Low Case
Generation
Capacity (MW)
Elec. Prod. Output
(GWh)
Generation
Capacity (MW)
Elec. Prod.
Output (GWh)
Viti Levu
28
196
15
105
Vanua Levu
42
294
23
161
Total
70
491
38
266
Source: JBIC, 2009
Much of the geothermal resource is located in two
sites, Savusavu (at approx. 170°C) and Labasa
(at approx. 120°C) on Vanua Levu Island, where
hydropower is marginal and projected energy
demand is increasing, partly due to the growing
energy demand from the local sugar cane industry
(specifically FSC).
The most recent report from the Japan Bank for
International Cooperation (JBIC, 2009) revealed
the existence of exploitable geothermal resources
in Viti Levu in addition to what is found in Vanua
Levu, and also presented two potential cases for
development in terms of generation capacities and
outputs, as presented in Table 2. The big discrepancy
between the high case and the low case indicates
that further investigation (exploratory drilling) is
required to confirm the size and performance of
each identified geothermal reserve/site.
16 Fiji
However, even with available geothermal resources,
upfront costs and investment risks remain very high in
most cases. Investment costs for a geothermal project
fall into four different categories: 1) exploration to
confirm availability of geothermal resources, including
exploratory drilling; 2) drilling of wells for production
and injection; 3) auxiliary facilities and infrastructure
(access roads, buildings); and 4) the actual power
plant (Goldstein, et al., 2011). Drilling costs vary
according to type of borehole, characteristics of the
respective geological formation, and mobilisation
cost for drilling rigs. As there are no suitable rigs
available in Fiji, the cost associated with first drilling
would be relatively high due to the mobilisation cost.
Relevant literature quotes typical drilling cost at
USD 1,200/m. Given a drilling depth of 500-1,000 m,
an exploration well would typically cost around
USD 1 million. Overall, geothermal investment costs
are typically below USD 4,000 per kW but may reach
Table 3: Current Status in Geothermal Licensing
Location
Remarks
Labasa
Active Licence
Savusavu
Active Licence
Sabeto
Lapsed Licence
Tavua
Lapsed Licence
Ba, Tavua and Rakiraki
Pending Application
Ba, Nawaka and Vuda
Pending Application
Namosi and Waimaro
Pending Application
Wailevu and Vaturova
Pending Application
Source: Department of Mineral Affairs
USD 6,000/kW for the smaller plants that are likely
to be relevant for Fiji. These costs have been a major
barrier for the development of geothermal resources
in Fiji.
At present, there are two active “Special Prospective
Licences” issued under the Mining Act (1978), in
which geothermal resources are classified as mineral.
These licences are held by a small local company,
which planned to do exploratory drilling. Two other
licences have lapsed and four other applications are
on hold due to pending legal matters (Table 3).
Beyond previous studies and endeavour, there
is a need for conducting a more comprehensive
resource assessments which can used to assist
with developing policy proposals. Other needs may
include enhancing capacities for geothermal plant
design, configuration, operation and maintenance
in Fiji. Cooperation with regard to an exchange of
resources, technology, and knowledge amongst
the key players in the space of geothermal energy
could culminate in technology transfer, capacity
building, and eventually investment in geothermal
power generation.
Renewables Readiness Assessment 17
Solar Panels on House/Shutterstock
18 Fiji
III.
ENABLING ENVIRONMENT FOR RENEWABLE ENERGY DEVELOPMENT
Government vision regarding the energy future in Fiji became clearer in the draft
NEP 2014 in comparison with the NEP 2006. The current vision addresses the
sustainability of energy sector development, with the goals of being “resource
efficient”, “cost effective” and “environmentally sustainable”. Following this
guiding vision, policy objectives in draft NEP 2014 were defined in two tiers: the
primary objective, aimed at achieving affordability for all Fijians; and the secondary
objectives, focused on sustainable energy production and reducing energy
expenditure on imported fuels. As illustrated in Figure 13, it is crucial to find ways
to reduce the costs of imported fuels and at the same time enhance sustainable
energy supply in a cost-effective manner.
Figure 13: Schematic Illustration of the Correlation of Policy Objectives
In this context, replacing imported fossil fuels with indigenous renewables has been
identified as one of the key instruments to use in achieving the policy objectives.
However, the extent to which this strategy can be employed cost-effectively depends
upon how well the enabling environment is established. By removing the key barriers,
favourable conditions for renewable energy development could be provided; thus all the
key players, particularly in the private sector, can be actively engaged and consequently
bring in the private investments that Fiji requires for its power sector development.
Without clear and achievable renewable energy targets, it would be less effective
to define the necessary components that need to be put in place and elaborate on
the relationship between them. By the same token, a comprehensive power sector
development plan needs to be developed to present an overall picture of how the
Fijian power sector ought to evolve, where investment opportunities would present
themselves and what risks and uncertainties prospective investments could be
exposed to. Renewable energy targets and a power sector development plan are two
prerequisites for devising and implementing an enabling environment for renewable
energy development.
Renewables Readiness Assessment 19
3.1 FIJI’S RENEWABLE ENERGY
TARGETS
The draft NEP 2014 proposed the renewable
energy targets, along with targets for electricity
access and energy efficiency, as presented in
Table 4. The same targets were proposed in Fiji’s
SE4ALL report, which was officially approved
and endorsed by the Government of Fiji. Hence, it
would be expected that the targets in draft NEP
2014 will likely be adopted by the Cabinet.
Table 4: Energy Policy Targets 2014
Indicator
Baseline
Targets
2015
2020
2030
Access to modern energy services
Percentage of population with
electricity access
89%a (2007)
90%
100%
100%
Percentage of population with primary
reliance on wood fuels for cooking
20%b (2004)
18%
12%
<1%
Improving energy efficiencyc
Energy intensity (consumption of
imported fuel per unit of GDP in
megajoules (MJ)/FJD)
28.9d (2011)
2.89 (-0%)
2.86 (-1%)
2.73 (-5.5%)
Energy intensity (power consumption
per unit of GDP in kWh/FJD)
0.23d (2011)
0.219 (-4.7%)
0.215 (-6.5%)
0.209 (-9.1%)
Share of renewable energy
Renewable energy share in electricity
generation
56%e (2011)
67%
81%
99%
Renewable energy share in total
energy consumption
13%f (2011)
15%
18%
25%g
a
Preliminary data from 2007 Census, Fiji Islands Bureau of Statistics 2012b
2002-2003 Household Income and Expenditure Survey, Fiji Islands Bureau of Statistics,(2004). Reliance on wood fuels alone for
cooking.
c
Based on 15% fuel substitution to local fuels and a 3% annual efficiency improvement.
d
Fiji Islands Bureau of Statistics based on average 36 MJ per litre of fuel.
e
Annual report 2011, FEA
f
Based on total energy consumption of 16,500 terajoules (TJ) (Fiji Islands Bureau of Statistics, 2011) and 55% power generation from
renewables (FEA).
g
Based on 99% renewable power and 25,000 kL of biofuel.
b
Source: SE4ALL Rapid Assessment and Gap Analysis Report, 2014
It is worth mentioning that the target for biofuel as
substitute for petroleum has also been proposed. The
draft NEP 2014 aimed at biofuel providing 2.37% of the
total liquid fuel supply by 2030. The linkage between
the biofuel target and the above-mentioned energy
targets is the estimated 25,000
thousand
litres
of biofuel production by 2030. The assumption is
that the sugar industry would be able to provide
100,000 tonnes of molasses as feedstock for biofuel
production in order to achieve this target. Given that
the policy goal is to improve the affordability of energy
services partly through reduced energy import costs,
it is important to reduce the consumption of fossil
fuels in other sectors than just the power sector.
33
Annex 1 in the Draft National Energy Policy, pp. 28-34.
20 Fiji
Interestingly, in the National Energy Forum33
that was conducted in July 2013 by Economic
Consulting Associates and SMEC (New Zealand),
to evaluate policy proposals regarding petroleum
and substitute fuels, “mandating oil companies
to blend biofuels” did not appear to be a
priority. On the other hand, “subsidising biofuel
production at village level” was identified as
one of the areas that should be prioritised.
This disparity in priority seems to suggest
preference for use of biofuels at a rural level over
large-scale usage.
In terms of investment needed to achieve the
proposed targets, it was estimated in the proposed
draft NEP (2014) that annual investment of
FJD 50 million34 in electrification and renewables
would be required over the period 2014-2030. This
would aggregate, over that time span, to one-third
of the total estimate that has been suggested in
the Strategic Action Plan, i.e. FJD 1.5 billion.35 Thus
an articulated investment plan might assist in
coordinating development of generation capacity
(100% renewable-based by 2030) with grid
development (expansion and enhancement).
“ …if the implementation of the policy encourages
even larger increase in investment then the dates for
achieving targets can be advanced over the life of
the policy.”36 To attract much-needed investments
from private sectors, the enabling environment must
be established, including the overall investment
climate, sound regulatory frameworks (for both
technical and economic regulations), policy
frameworks with associated supportive schemes,
financing instruments, risk mitigation mechanisms,
and sufficient levels of human and institutional
capacities that are required for implementation of
various measures and actions.
3.2 POWER SECTOR
DEVELOPMENT PLAN
As for all investments elsewhere, it is necessary to
provide an overall healthy investment climate, which
encompasses wider framework conditions such as
political stability, infrastructure development and
educational level, among others.
To meet the targets proposed, the physical power
system should be developed and enhanced. A
power sector development plan is useful not
only for investors who could identify investment
opportunities but also for energy planners who are
striving to find the least-cost options to achieve
the targets set by policy-makers.
Given the site-constrained nature of many
renewables, in cases where the renewable energy
resources are not close to the load centre or to users,
it is necessary to extend transmission or distribution
lines, or use interconnections to expand the grid
networks to reach the sites, provided that tapping
into these renewables at such sites is considered
to be economically viable. In other cases, where
renewable energy sources are close to the locations
of demand, decentralised power systems such as
stand-alone or mini-grid systems can be set up
relatively more easily; the grid issues are less of a
concern in these cases. Nevertheless, developing
a rural master plan, as suggested in the draft NEP
2014 and SE4ALL report, would be advisable.
In addition, in such a power development plan, it
would be easier to lay out the areas of priority –
such as geothermal and solar energy – as evidenced
by detailed studies of renewable energy sources
availability and associated economic considerations.
3.3 ENABLERS FOR INVESTMENTS
IN RENEWABLE ENERGY
To achieve the renewable energy targets,
investments and financing schemes are
instrumental, as spelled out in the draft NEP 2014:
New national energy policy
Priorities in the draft NEP 2014 are identified in
seven individual areas, namely: grid-based power
supply; rural electrification; renewable energy;
energy efficiency; transport; petroleum products
and biofuels; and implementation arrangements.
In addition to a dedicated section on renewables,
renewable energy appears in different sections
of the Policy, including grid-based power, rural
electrification, transport and biofuels, and is
therefore one of the leading themes of the draft NEP
2014.37 The draft NEP 2014 recommendations in six
priority areas for renewable energy development
are summarised below:
Grid-based power
• Increase private sector investment in largescale electricity generation by establishing a
transparent process for procurement of new
large-scale capacity from IPPs.
• Increase private sector investment in smallscale, grid-connected renewable generation
by establishing economically justified feedin tariffs or similar mechanisms to provide
incentives and reduce the risks for electricity
production from small-scale renewable sources
that are connected to the grid.
• Strengthen transparency and effectiveness of
the regulation of the electricity industry, including
establishing a formal regulatory contract
with FEA and making all forms of electricity
subsidy transparent. Regulatory functions,
34
Seen on page 17 in the draft NEP 2014
Seen on page 3 in the Strategic Action Plan
Quoted from page 17 in the draft NEP 2014.
37
While the Policy revolves around the priority policies described for seven main draft NEP 2014 areas, under each theme there are also
secondary priority policies. For details, refer to the final version of the draft NEP 2014 and the SE4ALL report
35
36
Renewables Readiness Assessment 21
including licensing and defining frameworks for
encouraging IPPs, should be carried out by the
DoE and the Fiji Commerce Commission.
Rural electrification
• Develop a national electrification master plan
based on least-cost solutions, which could
include grid extension, diesel and hybrid minigrids and stand-alone PV systems.
Renewable energy
• Establish a comprehensive assessment of
Fiji’s renewable energy resources, including
geothermal resources. Assessment will include
an inventory of suitable sites and technologies
together with an evaluation of their technical
and economic viability, and their associated
social and environmental impacts.
• Establish a data repository on renewable energy
resources that is accessible to the public and
prospective investors in order to remove the
information barrier to private sector and other
relevant project developers. Resource data
could also be shared globally on platforms such
as the global renewable energy atlas managed
by IRENA or the Pacific Regional Energy Data
Repository hosted by SPC.
• Conduct investigations into geothermal
energy with public sector funding, possibly
in cooperation with development partners
supporting geothermal development.
In policy discussions on renewable energy, lack of
renewable energy resource assessment has been
identified as one of the strong impediments to
private project development. Therefore an overall
renewable energy resource assessment should
be performed and the data should be made
publically available. However, from an operational
perspective, it may be necessary to define the
range of quality of resource data, as each individual
project requires different quality and sets of data.
It may be possible to make a project development
level of data available on a commercial basis, while
the public data providers could limit themselves to
provision of data considered sufficient for investors
to identify the zones that are worth further
investigation.
Legislative and regulatory frameworks
Legislative and regulatory environments affect
businesses through the costs of compliance,
including the costs and risks associated with
transparency in enforcement. It is important
to establish sound legislative and regulatory
frameworks under which business operation can
be ensured.
The 2013 policy review performed by the DoE
included a legislative gap analysis with the aim to
identify areas where changes in legislation might
improve energy sector coordination, trigger more
effective management of the energy sector and
assist effective implementation of the NEP and its
associated Strategic Action Plan.
Transport
Under the Electricity Act (currently under a detailed
review), FEA was established as a corporate entity
in charge of electricity supply in Fiji. FEA provides
advisory services to a the Energy Minister on
all issues around the generation, transmission,
distribution and use of electricity.
Biofuels
The Public Enterprise Act
FEA is a Government Statutory Authority,
governed by the Public Enterprise Act enacted in
1996 and revised in 2002. A core provision of the
Act is the establishment of a Public Enterprises
Reform Program, aimed at improving the overall
efficiency of the public enterprises. This entails the
restructuring of commercial sections of Government
Statutory Authorities and Government Commercial
Companies. Government entities, including the
FEA, are committed to operate in a competitive and
fair trading environment, as successful businesses
with clear objectives, management autonomy and
strict accountability. Under the Act, FEA is required
to pay at least 50% of net earnings (after tax) to
the government as dividends.
• Further investigate the potential and costeffectiveness of sustainable solutions for
maritime transport, including renewable energy
solutions as well as efficient motors, better
vessel design and improved maintenance.
• Continue research to explore the potential for
increased production and use of vegetable oil
and ethanol-based biofuels while remaining
mindful of the risks, in particular the tradeoffs between production of crops suitable for
conversion to biofuels and production of food
and cash crops.
Implementation arrangements
• Develop an IPP framework (responsibility of the
DoE) that will include procurement processes
and power purchase agreement principles for
large-scale capacity, and feed-in tariffs and netmetering arrangements for grid-connected,
small-scale renewables.
22 Fiji
Land Transport Act
established a Land Transport Authority, which is
responsible for regulating the registration and use
of vehicles, issuing drivers licences and enforcing
traffic laws. The Act empowers the Minister
responsible for transport to establish emission
and fuel consumption standards and allows the
Land Transport Authority to collect information
on registered vehicles, such as fuel type, year of
manufacture and other information that can be
used to determine and improve vehicle energy
efficiency.
Environmental Management Act
was enacted to protect natural resources and to
promote waste management and general pollution
control. It established the National Environment
Council, which approves the National Environment
Report and the National Environmental Strategy,
monitors implementation of the Strategy, advises
the government on international and regional
environmental commitments and treaties, and
facilitates discussion of environmental matters.
The Department of Environment, among others,
coordinates and implements environmental impact
assessment procedures for all energy projects as
well as waste management and pollution control,
including emissions from power plants.
Commerce Commission Decree
provides comprehensive guidelines concerning
regulated industries and consumer protection,
and establishes a Commerce Commission. The
Commission advises the Minister for Industry and
Trade regarding proposed access agreements
(including access to the FEA grid), facilitates
negotiations about access to infrastructure or
services under access regimes and arbitrates
disputes over access-related matters. The
Commission regulates the prices for electricity
and related services, including price control for
the electricity supply. This also empowers the
Commission to set the minimum tariff level that
FEA may offer to IPPs. The Commission also
determines the maximum prices for the sale of all
petroleum products.
Mineral (Exploration and Exploitation) Bill
states that all mineral resources, including
geothermal resources, in or under any land in
Fiji are the property of the State, and no persons
are allowed to carry out any activities involving
the prospecting, exploration and development
of minerals without a relevant licence. There are
different types of licences prescribed by the Bill:
• Prospector’s rights to prospect for minerals and
mark out areas for a proposed mining lease;
• Exploration licence to explore the specified
area and mark out and apply for a development
licence or mining lease;
• Development licence to develop the specified
area and apply for a mining lease or to retain
the mineral resources within the specified area;
• Mining lease to perform mining activities within
the area specified in the lease.
For each type of licence, the Mineral Bill outlines
the application process, criteria for granting the
licence, and the terms, conditions and statutory
requirements attached to the licence. The Bill also
includes provisions for compensations paid for
land, cultural and external disruptions, and royalty
payments to the government from development
licence holders and mining leaseholders, as well
as health and safety requirements for any mining
activities.
Key Energy Stakeholders
Fiji’s energy sector management suggests a
complex institutional and policy framework
with responsibilities allocated among various
institutions, including the Ministry of Works,
Transport and Public Utilities, the Ministry of
Tourism and Public Enterprises, the Ministry of
Finance and National Planning, the Ministry of
Foreign Affairs and International Cooperation, the
Fiji Commerce Commission, the FEA, and the Land
Transport Authority (see Figure 14).
The current institutional and policy framework
for the energy sector involves overlapping
responsibilities and gaps in the areas of
coordination, regulation and oversight, as well
as the lack of a single institution with overall
responsibility for planning and policy development.
One case in point concerns the roles of FEA.
The functions and duties of FEA are as follows:
• Generate, transmit and distribute electricity at
reasonable cost, and operate and manage the
related assets;
• Supply electricity to retail consumers based on sale
contracts concluded with individuals or companies;
• Issue and grant licences for the supply and
operation of an electrical installation. FEA is
empowered to determine the amount of the
licence fee, the licence conditions, and licence
term, to cancel licences if any of the conditions
are breached, to make regulations on the
conditions to be met by licence applicants and
Renewables Readiness Assessment 23
the conditions for suspension, extension and
revocation of licences, and to grant certificates of
registration to all new electrical installations; and
• Develop technical standards and specifications,
determine duties of inspectors and procedures
for inspections, develop and determine public
enquiries and notice procedures, and develop and
determine payments and collection methods.
The current institutional set-up has placed FEA in a
situation where the potential conflict of interest is
almost inevitable. On one hand, as a state-owned
power utility, FEA has the duty to provide electricity
to users and keep itself commercially viable, while
on the other hand, it has to take a regulatory role
in developing the framework guiding private sector
participation in the power sector.
Although the NEP 2006 foresaw significant
restructuring of the responsibilities for planning
and regulation, this did not materialise and
instead of becoming a planning and regulatory
unit, the DoE remained largely confined to project
implementation in specific areas such as energy
efficiency and rural electrification. Given the
challenges regarding the structure of organisations
that play a role in the energy sector of the
country, the recent draft NEP 2014 has suggested
establishing a new National Energy Coordination
Committee to be responsible for coordinating and
overseeing implementation of energy policies.
The draft NEP 2014 also identified serious
constraints in knowledge management – in
particular, the poor quality or complete lack of
national and regional energy sector data – as
a major obstacle for policy, planning, rational
decision-making, private investment and future
performance improvement.
With respect to creating an enabling environment
for renewables, a number of institutions in Fiji
have mandates to adjust the legal and regulatory
frameworks toward being attractive to potential
investors. These include the following:
• The Ministry of Works, Transport and Public
Utilities is empowered to give policy directives
to FEA and set targets that FEA is required to
meet in performing its functions and duties.
38
• The Fiji Commerce Commission is empowered
to determine price adjustments for regulated
goods and services, including electricity and
fossil fuels.
• The Ministry of Public Enterprise and Tourism
is empowered to scrutinise institutional
efficiency and commercial viability of FEA.
• The Fiji Electricity Authority is responsible
for conducting load forecasting, developing
expansion options through simulations and
power system planning, developing investment
plans, setting the rules for IPP’s and licensing
other enterprises that operate in the electricity
sector.
Significant changes are proposed under the
proposed draft NEP 2014 to remove regulatory
functions from FEA and strengthen the regulatory
mandate and capacity of DoE. In the meantime,
the ADB has allocated significant technical
assistance to strengthen the capacities of DoE, a
project that is expected to start in the first half of
2015.
The Fiji Commerce Commission also regulates
retail prices for petroleum products based on
submissions made by the private sector suppliers
through regular adjustments of maximum
retail prices in response to market developments.38
Unlike power tariffs, which are uniform throughout
the country, the price regulation for fossil fuels takes
supply cost at a given location into consideration.
For example, in remote rural areas these fuels
are more expensive, as the long supply chain
increases transport cost to these locations. The
issue of reducing the cost of fuel imports by
changing the current procurement model to
competitive tendering has been repeatedly raised
in Fiji.
As seen in Table 5 below, Liquefied Petroleum
Gas (LPG) is the most expensive fuel, considering
energy content. While the price regulation based
on location sends the right signal to the markets
(higher supply costs leads to higher prices) it
disadvantages more remote locations, which
are typically poorer than the urban areas on the
main islands.
The price determination by the Fiji Commerce Commission can be accessed at: www.commcomm.gov.fj
24 Fiji
Table 5: Maximum Retail Prices for Fuels, April 2013
Product
FJD/litre
FJD/tonne
FJD/MJ
MJ/litre
LPG
2.14
3,820
0.084
25.5
Unleaded Petroleum
2.58
3,510
0.076
34
Diesel
2.29
2,726
0.059
38.6
Kerosene
2.54
3,215
0.069
36.6
Premix
1.86
2,548
0.055
34
Source: Fiji Commerce Commission
Figure 14: Institutional Structure for Energy Sector Management in Fiji
Source: Mainstreaming Report 2013
Renewables Readiness Assessment 25
3.4 FINANCING AND INVESTMENT
Given the high costs of imported fuel, it would
be economically sensible to develop renewable
energy projects in Fiji. In order to boost renewable
energy investment, the RBF has introduced a loan
guarantee scheme and established mandatory
lending ratios that are applicable to renewable
energy. RBF is calling for commercial banks to lend
2% of their combined loan portfolio to renewable
energy projects.
In addition, the World Bank supports the Sustainable
Energy Financing Project, an initiative designed
to provide an incentive package for local banks to
increase lending for renewable energy and energy
efficiency projects. The project does not subsidise
investments but facilitates financing of sustainable
energy through partial risk guarantees, which allows
participating financing institutions to cover up to
50% of their renewable energy lending through the
World Bank’s risk-mitigation facility and provides
communication and technical assistance to financial
institutions. The technical assistance component of
the project includes training for loan officers and solar
installers in renewable energy and energy efficiency
workshops. By 2014, a total of 44 loans had been
approved (30 businesses and 14 individuals), which
were mainly invested in energy efficiency, solar PV,
solar water heating, and biofuel production projects.
As of September 2014, the total value of the loan
portfolio under the Sustainable Energy Financing
Project came to FJD 15 million from ANZ Bank and
FJD 5.3 million from the Fiji Development Bank. Up
to now, more than 15,000 installations have been
financed under the ESFP.
By comparison, the investment from private sector
lags behind, even though the Government of Fiji
has contemplated mobilising private capital for
39
electricity-sector investments since 1995.39 The lack of
private investment in the energy sector is attributable
to many causes. Two key factors include the overall
unfavourable climate of investment for private
investors and the inadequacy of the IPP tariffs offered
by FEA, according to the Strategic Action Plan.40 The
Fiji Government has taken steps to address these
two barriers that have hampered private investments
in renewables. In May 2014, a major step was taken
to improve the general business environment for
private sector participation by increasing the IPP
rates initiated by the Fiji Commerce Commission for
encouraging third party electricity generation and
addressing the issue of the lack of public information
about renewable energy.41
In response to the emphasis on renewable energy
development through IPP in the draft NEP 2014,
the Fiji Commerce Commission made a groundbreaking ruling on minimum tariff rates that FEA
must offer to IPPs. The Commerce Commission
argued that by not attracting IPPs, FEA was
foregoing cost savings in terms of fossil fuelbased generation, with avoidable cost calculated
at 0.46 FJD/kWh. Based on this figure, the Fuji
Commerce Commission increased minimum
IPP tariffs by 17%, from 0.2565 FJD/kWh to
0.3308 FJD/ kWh.42
In the past, FEA has successfully argued that the
avoided cost (of thermal generation) cannot be
used as a benchmark for determining IPP or feedin tariffs. FEA sees the need to cap IPP tariffs
at their average retail tariff minus a “network”
charge, which also includes a profit for FEA. This
neglects the simple commercial reality that any
kWh not supplied from thermal generation means
an improvement of FEA’s bottom line as average
tariffs are significantly lower than electricity
production cost from thermal generation.
In 1995, the Forum Secretariat (Pacific Energy Program) supported the Fiji DoE in a call for expressions of interest of IPP investors.
Seen on pages 32 and 35.
41
Fiji was ranked 60th in the 2013 Doing Business report by the World Bank. Fiji is well below the regional average in some categories,
including starting a business. Similar conclusions are drawn in the ADB’s 2013 Private Sector Assessment, which states “The general
business climate in Fiji is not conducive to attract sufficient private capital and investment levels have never been lower since
independence.”
42
According to Final Authorisation, Independent Power Producer Rates, Fiji Commerce Commission 16 May 2014
40
26 Fiji
IV. OPPORTUNITIES FOR DEPLOYMENT OF RENEWABLE ENERGY
The National RRA Consultation Workshop attracted representatives from
a considerable variety of public, private and civil society organisations. Key
government agencies were represented together with senior officials from
state-owned enterprises such as FEA and FSC. Representatives of development
partners also participated, demonstrating the importance these development
partners give to energy policy and energy sector development in Fiji. Considering
this broad participation the workshop was a key event in Fiji’s energy policy
development process. In total, 83 individuals attended the workshop, including
high-level representatives of both public and private sector entities. In addition,
representatives of regional and international organisations with interests in Fiji’s
energy sector development also attended the workshop, such as the International
Union for Conservation of Nature (IUCN), and United Nations Development
Programme (UNDP).
Four break-out working groups then worked on details of the four service-resource
pairs and reported back to the plenary after of intense discussion. Although varying
in detail, the results of the work group sessions provide an excellent guideline for
the status of the service–resource pairs under consideration. The summary actions
provided in the main body of the text take into account not only the workshop
results but also further discussions with DoE and other stakeholders.
Service-Resource Pairs
Fiji needs a diversified portfolio of energy sources for enhanced security of supply.
The process of identifying priority areas in “service-resources” is focused on
options that have not yet been promoted or developed in Fiji but would potentially
lead to innovation and new applications due to their cost advantage and their
possible role in enhancing energy security, sustainability and diversified supply.
They would not prevent the development of “conventional” service-resource pairs
but instead provide a perspective for complementary new actions. The following
four service-resource pairs have been identified that are consistent with the draft
NEP 2014 under consideration by the Government of Fiji.
Grid electricity supply – Geothermal energy
Geothermal energy has the potential to reduce electricity supply cost in FEA’s
grids. More importantly, it could provide base load electricity and protect the
utility against price fluctuations for fossil fuels as well as against fluctuations
in the hydrological cycle and droughts. It is expected that levelised generation
cost for medium-size geothermal power (5-10 MW) would be competitive with
all other sources and technologies. Even at the higher end of generation cost
reported from international experience (0.12-0.15 USD/kWh), geothermal would
be competitive with wind and new hydro while providing firm power without
fluctuations. Providing firm capacity for meeting the base load demand is not only
technically important for the utility due to less variation in outputs but is culturally
very familiar to the utility’s managers and engineers/operators and thus, as with
hydropower, more easily accepted in contrast to variable renewables such as solar
PV or wind.
As of 2011, there was no geothermal-based electricity generation in Fiji. However,
four sites have been identified with potential geothermal resource activity:
Renewables Readiness Assessment 27
Savusavu, Labasa, Sabeto and Vatukoula. A
preliminary study by the Japanese Ministry of
Economy, Trade and Industry in March 2009 found
that there is a “potential for 23 MW of geothermalbased electricity generation in Vanua Levu, at
least 20 MW of which is near to the urban centres
of Savusavu and Labasa (10 MW is near to each
grid)”. Two companies have applied for licences to
commence geothermal projects in Fiji; there are
no pending licences as of 2015. These companies
include Geothermal Electric Ltd and Australian
KUTh Energy (now taken over by GeoDynamics
Ltd). Geothermal Electric Ltd. is interested in
Savusavu and has a target capacity of 200 MWe
or more; however, the total energy output could
be as low as 3 MWe due to the uncertainty about
the temperature and volume of hot water within
geothermal reserves in the region.
Financing for geothermal development from the
World Bank Group (WBG) has increased from
USD 73 million in 2007 to USD 336 million in 2012,
which represents around 10% of its total renewable
energy lending. One of the main barriers to
accelerating the deployment of geothermal
energy projects is the high risk associated with
exploratory activities due to their high level of
uncertainty. In an effort to further enhance the
financing for global geothermal activities, WBG
has initiated a USD 500 million project, called the
Global Geothermal Development Plan, which was
launched in Reykjavik, Iceland, in 2013. The project
serves to “better manage and reduce the risks of
exploratory drilling to bring geothermal energy
into mainstream.” A study on surface exploration
among other technical support has been carried
out under a Geothermal Compact formed by the
World bank in cooperation with Iceland. In addition
to these initiatives, there are also some existing
instruments within the World Bank, which could be
used for risk reduction:
• Portfolio guarantees cover a proportion of the
losses on the package of loans (or projects) as
a whole. This type of instrument was used in
Thailand as part of the Clean Technology Fund,
Sustainable Energy Finance Programme. To
counter the major barrier of lack of long-term
financing, as well as financiers’ perceptions
of high risk, the Clean Technology Fund
offered a guarantee, with a total amount of
USD 70 million, to cover part of the potential
losses for an energy-efficient or renewable
energy portfolio.
• Loss reserves operate in a similar manner, except
in this case the actual sums required to cover
the guarantees are set aside rather than simply
being a promise to pay if the guarantee is called.
28 Fiji
• Contingent resource insurance is of particular
relevance to geothermal projects, given that
they require drilling of costly exploration wells
to assess the existence of adequate resources.
This instrument pays part of the costs of
geothermal wells that prove to be unsuccessful.
An example case study for Fiji geothermal
exploratory activities could be taken from the
Hungary Case GeoFund in 2012. This project
comprised three components: a direct investment
funding mechanism aimed at reducing capital
costs for project developers; risk mitigation to
reduce the exploration and operation risks by
providing an partial insurance to project investors
and developers; technical assistance to provide
information and knowledge needed for geothermal
project development. With a total final pay-out of
USD 3.3 million by WBG, the GeoFund project in
Hungary offered a guarantee to pay 85% of the
costs of unsuccessful geothermal exploration wells.
To further support geothermal energy development
in Fiji, the World Bank has decided to provide
technical assistance to identify 2-3 major sites for
geothermal-based power generation. The study
will begin soon.
Beyond previous studies and endeavour, there is
a need for conducting a comprehensive resource
assessments which can be used to assist with
developing policy proposals support geothermal
energy among other efforts including building
capacity to design, build, operate and maintain
geothermal plants in Fiji, along the lines that other
countries, such as New Zealand, Kenya or Indonesia,
have developed for using this technology. SouthSouth cooperation with regard to sharing of
resources, technology and knowledge should lead
to effective technology transfer, in addition to
enhancing capacity and technical skills.
Given the great potential for geothermal energy
development in Fiji, the private sector has
expressed strong interest in developing this
resource. However, to facilitate the investment
process, a number of barriers have been identified
that currently seem to stifle progress and therefore
need to be effectively addressed.
Firstly, there is the general uncertainty with regards
to the IPP framework. The uncertainties relating to
tariff as well as other conditions of power purchase
agreements weigh heavily on a technology that
involves significant exploration risks. The high
costs coupled with the failure risk associated
with exploration pose a persistent challenge to
geothermal development from the perspective of
both developers and financers. Therefore, it is a
common practice to reduce the drilling costs by
using public resources either through government
or multilateral development banks.
Secondly, there is uncertainty with regard to
licensing. The issuance of four special prospector
licences is pending and two licences that had been
issued by the Department of Mineral Resources
have already lapsed. Licensing has been under
discussion in the ongoing review of the Mining Act
that was undertaken in 2014. Stricter background
checks of companies that apply for prospector
licences may help to ensure that licensees actually
carry out the work after the licence is issued.
Lastly, there is a significant lack of technical
capacity in both the private and public sectors in
Fiji; neither DoE, nor FEA nor the Department of
Mineral Resources have personnel with specific
knowledge and experience in geothermal power
development. This suggests that capacity building
is needed for the public sector in charge of the
development of the geothermal energy. More
about geothermal can be found in Annex 1.
Grid supply – Solar PV electric generation
On-grid PV installations are slowly gaining
popularity in Fiji, given distributed solar PV’s
positive impact through reducing transmission and
distribution losses, lowering the need for fossil fuel
in power generation, enhancing energy security
and leveraging significant investment from the
private sector. Distributed solar PV systems work
very well in the presence of storage hydro and thus
would be an effective addition to the supply mix
in Fiji.
Development of the on-grid PV sector in Fiji is
led by the private sector, with investments in
small projects in the 10-200 kW range. A new
business model promoted by two local companies
(Sunergise – a subsidiary of Sunergise International
– and Clay Engineering) entails the company’s
ownership of such systems operated under a lease
contract with the client; i.e. the systems can be
easily redeployed if clients terminate contracts.
At the end of the contract, customers have three
options: extending the arrangement; purchasing
the panels; or terminating the arrangement and
having Sunergise (or the company in charge)
remove the panels. Currently, there are several
grid-connected commercial PV installations using
the lease model, totalling around 600 kilowattpeak (kWp) in Western Viti Levu. Of these, the
largest grid-connected installation is a 250 kWp
system at a poultry farm near Ba. Sunergise is the
leading solar company in Fiji and has installed a
total capacity of 1 MW with an estimated output
of 1.5 GWh per annum. Installations are mostly
in Western Viti Levu, where solar irradiation is
high. Sunergise suggests that capacity factors
around 17% are achievable in this part of Fiji.
Apart from the private sector installations, there
is also a donor-funded, on-grid project: the Korea
International Cooperation Agency has funded a
54 kWp installation at the University of the South
Pacific in Suva.
Grid-connected solar has a considerable potential
in Fiji when benchmarked against avoided cost
of diesel generation of 0.46 FJD/kWh. However,
mobilising this potential would require substantial
changes in the enabling environment. Currently,
privately financed on-grid solar PV projects are
only viable for those investors whose daily load
curve allows direct consumption of the generated
electricity on the premises. Roof- mounted PV
installations cost approximately FJD 3,000/kWp in
2014, which translated into a levelised production
cost of FJD  0.25/kWh. This is significantly lower than
FEA’s current commercial tariff (FJD 0.399/ kWh)
and is thus an attractive investment as long as no
excess power has to be exported into the grid.
However, FEA only offers FJD 0.15/kWh as tariff for
intermittent power, which is too low to generate
any interest from developers in developing solar
energy projects. To enable private households
to participate in roof-mounted PV generation,
a net metering arrangement or viable feed-in
tariffs could unleash a boom in privately financed
solar generation, although the current domestic
FEA tariff (FJD 0.3308/kWh) is lower than the
commercial tariff.
The Fiji Commerce Commission has ruled in May
2014 that FEA must offer FJD 0.3308/kWh to all
IPPs. However, FEA argues that these tariffs only
apply to firm power and not to intermittent power
such as roof-mounted solar PV.
At current prices, roof-mounted solar PV shows
levelised cost on the order of USD 0.14/kWh, which
is lower than FEA’s retail tariffs. Levelised cost
of solar would be less than 50% of what can be
expected from FEA’s latest investment in 35 MW
of heavy fuel oil generation, which has a capital
cost on the order of USD 1,100 per installed kW and
a levelised cost of roughly USD 0.25/kWh at heavy
fuel oil supply cost of USD 800/tonne.
The favourable generation cost of solar PV has
already allowed commercial investors, mainly in
the tourism industry, to install roof-mounted solar
to partially generate their own power. However, in
the absence of either a net metering framework or
a viable feed-in tariff, only those FEA clients who
have a high and stable daytime load can achieve
commercial viability for their investments. The
Renewables Readiness Assessment 29
nature of the load curves for private households
and for most commercial electricity consumers
excludes them from participating in this market.
Grid supply – Biomass-fuelled electricity
generation
Biomass, as stored energy resource, can be used
to generate base load electricity if the feedstock
supply can be managed effectively. As discussed
in the previous chapters, Fiji has a wide range
of feedstock, including bagasse from the sugar
industry and forestry residues such as sawdust
and wood chips from the forestry industry, which
have already been used for generating power
and heat. The scale-up of these applications is
under development and has been supported by
Government of Fiji.
It was estimated that during 2014 FSC would
produce about 450,000 tonnes of bagasse. Wood
chips or other biomass are used to supplement
bagasse in some of the mills when there is a
shortage of bagasse. Forestry residues from
the logging and wood-processing industry can
also provide a significant amount of feedstock.
This industry is estimated to produce nearly
200,000 cubic meters (m3) of biomass residues
per year.
Although sugar cane production in Fiji has been
declining since 2006, the Government of Fiji is
also keen on revitalising the industry. FSC plans to
double its bagasse-fired power generation capacity
by adding a total of 5–10 MW at Labasa by 2014 and
40 MW at Rarawai by 2016, respectively.
In addition, Fiji is also looking into other biomass
resources, waste-to-energy in particular. The
recent study, conducted jointly by UNDP and Fiji
DoE in 2014, on resource assessment for wasteto-energy has detailed the amount and type of
resources available, covering municipal solid waste,
wastewater, livestock waste from the husbandry
industry, non-hazardous organic industrial waste
and agricultural residues. This will not only address
the energy issues but, more importantly, address
the environmental challenge posed by the growing
population, rapid urbanisation, and changed
consumption patterns.
Off-grid renewables – Rural energy
supply
Solar energy has been used for meeting the
demand in rural areas. Over the past decades, Fiji
has had considerable experience with both standalone PV and solar thermal technology. Solar water
43
heaters are popular in high-cost housing and the
tourism sector. Off-grid PV solar systems have
been installed in Fiji since the 1980s, beginning
with small-scale projects in the islands of Kadavu
and Koro. Solar electrification continued over the
years with mixed successes, mostly under donor
sponsorship.43 In 2008, the European Union
funded a programme of solar electrification for
schools in rural areas, which included 1 kW systems
for schools and 200-watt systems for teachers’
quarters.
With the significant decline in system cost and
the continued advancement of technology, solar
PV has now become the DoE’s preferred rural
electrification option for areas without grid access.
In total, the DoE had already installed 4,600
solar systems between 1990 and 2013 and as of
31 December 2014, 5,500 solar home systems
were installed. All newly installed systems receive
technical support under the DoE programme in
order to ensure sustainability of supply.
For the villages that can be powered by minigrids, over the years the Fiji DoE has supported the
installation of approximately 600 mini-grids powered
by diesel engines in the power range of 5-35 kVA. Most
of the existing mini-grid diesel generation capacity
has become non-operational or underperforming
largely due to the following reasons:
• Rapidly increasing fuel prices in addition to the
difficulties encountered in getting fuel from
urban centres to the villages and settlements,
especially in the outer islands;
• Lack of financing for fuels and spare parts;
• Lack of skilled operators; and
• Lack of proper maintenance – most of the
existing diesel power generation systems
require a complete overhaul, which could cost
as much as FJD 3.6 million according to DoE’s
estimate.
Hybridisation would be an effective way to
relieve villagers from the burden of high costs
for operation and maintenance (O&M) and fuel.
There is an opportunity to convert a significant
portion of the 600 diesel-powered rural mini-grids
that suffer from high fuel and generation cost
(approx. USD 0.56/ kWh or 1 FJD/kWh) and face
problems in the fuel supply chain and the O&M of
the diesel units. The existing mini-grids represent
a substantial asset funded by the government,
Some of these projects failed after the sponsorship was finished, due to institutional arrangements that did not factor in the
sustainability of the system operation.
30 Fiji
which could be made more environmentally and
economically sustainable by significantly reducing
diesel operation time (thus, diesel consumption)
through hybridisation with solar PV systems with
battery storage. The diesel gensets would be
retained and the systems would be optimised in
hybrid configurations keeping battery capacity at
a minimum.
Hybrid projects of this nature have started to
emerge in Fiji and are financed mainly by private
operators in the tourism industry in areas not
covered by FEA’s supply. There is also one rural
electrification project that has used the technology,
which consists of a 10 kWp solar array producing
40 kWh per day. Instead of designing the battery
bank for 4-5 days of supply (which is necessary
when there is no diesel generator), the project
could cut total investment cost to approximately
USD 50,000 by reducing battery capacity to
two days of supply or 80 kWh. Further refinement
of the technology could achieve even lower battery
capacity but would require a good understanding
of the solar regime at a given site. Converting
some 500 diesel-powered rural mini-grids into
solar-diesel hybrids would cost approximately
USD 20 million, including rehabilitation of those
diesel generators that have fallen into disrepair.
Only those mini-grids that are in reasonable
condition warrant upgrading to hybrid systems.
In locations where mini-grids are dilapidated, the
DoE prefers to supply solar home systems as an
alternative. Such a retrofit to hybrid would not
only safeguard a very substantial investment that
the government and participating communities
have made but also significantly reduce the
burden that pure diesel generation has placed on
rural communities in Fiji. Following analysis on
the hybridization of a diesel grid, the solar option
should be undertaken in the framework of the rural
electrification master plan. One of the foci for the
analysis is to look into the optimal ratio of diesel
to solar PV generation capacity in various settings.
National and regional maritime transport
– More efficient vessels
The maritime transport sector, which accounts for
22% of fossil fuel use in Fiji, has recently attracted
attention as a potential sector where significant
quantities of fossil fuels could be conserved through
a variety of new technologies and processes. The
sector is critical to all aspects of socio-economic
development in the region, including migration,
transport of goods and services, agriculture and
education, as well as evacuation and disaster relief.
The regional organisation mandated to support
the maritime transport sector in the Pacific region
is the SPC’s Economic Development Division,
based in Suva. In response to calls from Pacific
Forum leaders, SPC has developed a framework
for action on transport services. The framework
addresses both maritime and civil aviation and has
been developed with the broad participation of
regional governments and other key stakeholders
in the region. The framework has integrated seven
themes: governance, capacity development, safety
and security, improved access, energy, information
and sustainability. The framework acknowledges
the potential for fuel savings through both
technology and operational improvements and
logistics (SPC, 2011).
Applied research at the University of the South Pacific
(USP) in Fiji and elsewhere in the world suggests that
solar- and sail-assisted maritime transport has the
potential to reduce fuel consumed by vessels and
ships. A research group at USP believes that mediumsized cargo ships and ferries operating in Fiji and
across the Pacific are suitable for such retrofits. The
USP group has approached a number of potential
sponsors to obtain financing for a pilot project in
renewable energy-assisted maritime transport.
In 2014, SPC completed a study specifically
addressing the question of whether alternative
energy has a role in sustainable maritime transport
within the Pacific Islands region.44 The study
concludes that there is clearly a market for sailing
and hybrid ships today; the question is not whether
they work but whether they are the type of vessel
appropriate for the Pacific Islands feeder shipping
services for cargo and passengers. In comparing
studies completed by ADB and others, and
considering the costs of wind power options today,
the study further concludes that sail assistance
on ships involved in regular relatively large-scale,
scheduled inter-island services for freight and
passengers is at present not a good investment
financially or operationally. Hybrid sail-assisted
vessels for the Pacific islands are not considered a
realistic commercial option and the study expresses
the view that scarce resources such as aid funding
should not be spent on these options but focus
instead on energy efficiency improvements (hull
forms, propellers, paints, etc.). The development of
sail or hybrid systems should be conducted on a
user-paid or cultural basis. Requirements of service
reliability and predictability make the management
and governance issues of greater significance than
the ship propulsion method, and efforts currently
need to be placed in that direction.
44
Sustainable maritime transport within the Pacific Islands region - does alternative energy have a role? Paper prepared for Economic
Development Division of SPC, J. Joy, January 2014
Renewables Readiness Assessment 31
While it is acknowledged that sail and hybrid
propulsion systems have a place for roles in tourism
sectors and other niche operations, it is argued that in
local and regional shipping services, the emphasis on
energy conservation should be carefully studied, along
with the efficiency improvements mentioned above.
Solar PV panel/Shutterstock
32 Fiji
With regard to renewable-assisted maritime
transport, it appears that two of the leading
regional organisations, USP and SPC, have views
that are quite different. There seems to be a need
to develop a common strategy for the maritime
sector before embarking on investments.
V.RECOMMENDATIONS
In the following section, key recommendations are listed together with the
priority actions related to the service-resource pairs identified. These have either
been developed at the national RRA workshop or in direct discussions with
representatives of key stakeholder institutions.
The RRA adopts a coordinated approach and facilitates the setting of priorities
that can enhance discussions with bilateral and multilateral cooperation agencies,
financial institutions and the private sector with regard to the implementation of
actions and initiatives that are identified throughout the RRA process.
Endorsement of the new National Energy Policy
As an overarching recommendation, the Government of Fiji is urged to endorse
and implement the draft NEP 2014 as soon as possible. Development partners
have already committed to support initiatives identified in the draft NEP 2014, such
as the development of a rural electrification master plan and the strengthening of
the regulatory capacity of DoE. An early endorsement of the draft NEP 2014 would
reduce uncertainty and risk in the eyes of prospective energy sector investors and
their lenders.
Creation of an effective enabling environment for renewable energy
Efforts should be focused on creating an enabling environment that would allow the
government’s objective of attracting private sector investment to the renewable
energy sector to materialise. There are three groups of private sector investors
that could play a pivotal role in accelerating renewable energy deployment in Fiji:
• Small-scale investors (private households and businesses), who could invest in
distributed generation (solar, wind) at their respective premises;
• Specialised private IPP developers, who could finance a considerable share of
Fiji’s new generation requirements; and
• Concession developers, who could provide power supply (generation,
distribution, retail) in unserved areas, such as Taveuni.
The creation of an enabling environment should start with the removal of
uncertainty for both prospective investors and their lenders.
Firstly, there is an uncertainty with regard to future ownership of FEA. The 2013
government budget supplement mentioned the energy sector reform, including the
separating FEA’s regulatory and commercial roles, which is close to completion.45
The Electricity Act review and the proposal of re-defining FEA as a commercial
body with both public and private ownership is being further investigated. However,
details on these changes still have to be developed. Investors and lenders will be
reluctant to move until there is clarity; the earlier this can be established, the more
likely private sector investors will be to move forward. The adoption of the draft NEP
2014, as explained above, would also add more certainty and clarity.
Secondly, there is a regulatory risk with regard to IPP investment. The Fiji Commerce
Commission determines minimum IPP tariffs (for firm power) when it comes to
FEA’s retail tariffs. This is an unusual procedure, as the minimum tariff is prone
to shift either upwards or downwards. If an investor expects an upward move in
45
It is still an ongoing activity. ADB is working together with the DoE to restructure the department
and make an investment proposal by 2016, according to Fiji Times www.fijitimes.com/story
.aspx?id=282699
Renewables Readiness Assessment 33
the minimum tariff, he will hold back until a higher
minimum tariff has been regulated. If tariffs are
regulated downward, it is unclear how existing power
purchase agreement contracts would be affected. In
this context, it would be worth studying carefully the
policy instruments used in Fiji as well as the innovative
policy tools developed in other countries. Based
on the results, an effective policy scheme could be
designed accordingly.
It is also advisable to review and harmonise key
legislation in order to improve the legal framework for
renewable energy development. Such changes could
include removal of conflicts of interest in regulation.
The new functions of DoE should include the issuance
of licences to operate electrical installation, which is
currently the responsibility of FEA. While the Fiji
Commerce Commission should remain responsible
for economic regulation, in line with the draft NEP 2014
suggestion, it could be given a stronger mandate to
implement these responsibilities through a multi-year
regulatory contract or similar instrument. New legal
provisions (such as amendment to the Electricity Act
or new Energy Act) could be introduced to address
the reallocation of planning responsibilities in the
energy sector. DoE could be given the responsibility
for rural electrification planning, including grid
extension and national electrification master plans.
Power development and asset management plans
prepared by FEA would be expected to comply with
these plans. Amended legislation should also allow
DoE to enact secondary legislation (regulations) to
cover specific topics in relation to the implementation
of the draft NEP 2014.
While some changes could be achieved in the
short term by amending the existing legislation,
development of a comprehensive Energy Act could
be undertaken as an overarching primary legislation to
govern the entire energy sector. It would consolidate
various aspects of legislation related to the energy
sector by providing a primary legislative background
to energy sector coordination.
Creation of a Renewable Energy
Investors Association
As suggested by private sector stakeholders and
prospective investors, a Renewable Energy Investors
Association should be formed, as private sector
participation in renewable energy development
requires a stronger voice in advocating their cause.
34 Fiji
Development of a Coordinated Rural
Electrification Master Plan
Developing a rural electrification master plan was
an important element of the draft NEP 2014. It is
even more important to ensure that such a master
plan be developed in a coordinated fashion, both
thematically and institutionally. Rural electricity
supply should be provided in connection with
rural development and sustainable operation of
a power system in rural or remote areas. When
developing the plan, it would make both economic
and technical sense to look into the low-hanging
fruit options, such as hybridisation of the existing
diesel-fuelled systems. To take advantage of
such options, changes in the existing rural
electrification policy might be necessary.
Coordination amongst the ministries within the
Fijian system should be facilitated through the
establishment of a National Energy Coordination
Committee and the restructuring of roles and
responsibilities as suggested by the most
recent draft NEP 2014. Effective inter-ministerial
coordination is crucial for effective implementation
of the draft NEP 2014 targets and associated
Strategic Action Plan.
Lastly, there is a need for inter-donor coordination
on this initiative. Donors interested in active
engagement could formulate a consortium
to support Fiji’s DoE in developing the rural
electrification master plan.
Consideration of alternative fuels for
maritime transportation
About 20% of imported fuel is used for maritime
transportation in Fiji. One consideration with
respect to powering boats with renewable energy
sources is whether technological options are
mature enough for implementation. The USP has
conducted a study on this subject. The practice
of using biofuels in boat engines (dual tank) does
exist in the Pacific, albeit mostly in outer islands
for shorter distance transportation. Whether or
not such a practice can be rolled out on a larger
scale depends largely upon feedstock availability,
management and production, in comparison with
the cost of imported fuels. Further study on this
concept is required and knowledge-sharing with
like-minded islands, such as Tonga, should be
encouraged.
Exploration and exploitation of
geothermal energy
The Legislative Gap Analysis report proposed
development of a geothermal Decree and
Regulations. This would mean that geothermal
energy would eventually be separated from the
Mining Act, which is currently regulating geothermal
energy-related activities in Fiji. Geothermal energy
attracts increasing attention from investors and
thus deserves its own regulatory framework, which
could make more detailed and specific regulations
and thus help investors understand the benefits
and risks associated with investment in geothermal
energy development.
One example in this case is licensing. The current
mechanism is under review with the aim of
addressing the lack of committed investment
once licensing is granted. One practical approach
would be to make the validation of licensing timebounded. If the investor/developer who has been
granted a licence lags behind the committed
investment, the licensing could be revoked entirely
or partially, with some possibility to resume it
within an agreed grace period.
However, as far as geothermal energy projects
are concerned, the biggest risk lies in exploratory
drilling. How to minimise the risks of drilling is a
priority issue that needs to be solved. There are
some mechanisms available to mitigate the risks.
However, it is advisable to develop a geothermal
development risk mitigation fund supported by the
key multilateral development banks, such as the
World Bank and ADB. A local fund management
unit/office should be established to ensure that the
fund is properly managed.
Renewables Readiness Assessment 35
Grid connect PV at Government quarters
Photo: Government of Fiji
36 Fiji
VI. REFERENCES
ADB (Asian Development Bank) (2013), Re-invigorating private sector investment: A private sector
assessment for Fiji, ADB, Mandaluyong City.
ADB (2014), “ADB Pacific Economic Monitor 2014”, ADB, July, www.adb.org/publications/pacific-economicmonitor-july-2014.
APCTT-UNESCAP (Asian and Pacific Centre for Transfer of Technology — United Nations Economic and
Social Commission for Asia and Pacific) (2010), Fiji: Renewable Energy Report, APCTT-UNESCAP, Suva.
Asmundsson, R.K. (2008), South Pacific Islands Geothermal energy for Electricity Production, IIDA (Icelandic
International Development Agency), Reykjavík.
Campo, J.A. and V. Sarmiento (2013). “The Relationship between Energy Consumption and GDP: Evidence
from a Panel of 10 Latin American Countries”, Latin American Journal of Economics, Vol. 50, No. 2, 233-255.
FAOSTAT (n.d.), “Fiji”, http://faostat.fao.org/CountryProfiles/Country_Profile/Direct.aspx?lang=en&area=66,
accessed November 2014.
FEA (Fiji Electricity Authority) (2007), FEA Annual Report, FEA, Suva.
FEA (2011), FEA Power Sector Development Plan, Vol. 1-3, 24/11/2011, FEA, Suava.
FEA (2012), “Annual Report 2012”, Suava, FEA, www.fea.com.fj/UserFiles/files/FEA%20ANNUAL%20
REPORT%202012.pdf.
FEA (2014), Terms of Reference for Valuation of FEA Using Discounted Cash Flow, Suava, FEA, January.
Fiji Bureau of Statistics (2012a), “Poverty in Fiji: Changes 2002-03 to 2008-09 and Policy Implications”,
https://narseyonfiji.files.wordpress.com/2012/04/final-poverty-report-15-februrary-2012-contents-prefaceand-acknowledgement.pdf.
Fiji Bureau of Statistics (2012b), “Population”, Key Statistics: June 2012, www.statsfiji.gov.fj/.
Fiji Islands Bureau of Statistics (various years). Overseas Merchandise Trade, Suva.
GEF (Global Environmental Facility) (2009) “Mid-Term Report of the Fiji GEF Pacific IWRM (Integrated
Water Resource Management) Demonstration Project: Environmental and Socio-Economic Protection in Fiji:
Integrated Flood Risk Management in the Nadi River Basin”, www.pacific-iwrm.org/mid-term-reports/GEFPacific-IWRM-Fiji-Draft-Mid-Term-Report.pdf.
GoF (Government of Fiji) (2014), Sustainable Energy for All: Rapid Assessment and Gap Analysis, GoF,
February.
Goldstein, B., et al. (2011), “Geothermal Energy”, In IPCC (Inter-governmental Panel on Climate Change)
Special Report on Renewable Energy Sources and Climate Change Mitigation, (Eds. O. Edenhofer, et al.),
Cambridge University Press, Cambridge and New York.
Gonelevu, A. (2002), “Mini and Micro Hydropower Development in the Republic of the Fiji Islands”, www.
hrcshp.org/en/world/db/Fiji.pdf.
Holm, A., et al. (2010), Geothermal Energy: International Market Update, Geothermal Energy Association,
Washington, D.C.
Huang, B.N., M.J. Hwang and C.W. Yang (2008), “Causal relationship between energy consumption and
GDP growth revisited: A dynamic panel data approach”, Ecological Economics, Vol. 67, No. 1, pp. 41-54.
IEA (International Energy Agency) (2013), World Energy Outlook 2013, OECD (Organisation for Economic
Co-operation and Development)/IEA, Paris.
Renewables Readiness Assessment 37
International Journal on Hydropower and Dams (2011), World Atlas and Industry Guide 2011, Aquamedia
International, Surrey.
IRENA (International Renewable Energy Agency) (2013), Renewable Power Generation Costs in 2012: An
Overview, IRENA, Abu Dhabi.
Kumar, A., and S. Prasad (2010), “Examining Wind Quality and Wind Power Prospects on Fiji Islands”,
Renewable Energy, Vol. 35, pp. 536-540.
Kumar, S., (2011), “Co-integration and the Demand for Energy in Fiji”, Global Energy Issues, Vol. 35, No. 1,
pp. 85-97.
NEP (2014), National Energy Policy, Fiji Department of Energy, Suva, Final Draft, October 2013.
RBF (Reserve Bank of Fiji) (2014), Economic Growth Projections Revised Upward, Press Release No. 12/2014, RBF.
RBF (various years), Quarterly Review, Reserve Bank of Fiji, Suva.
Saula, I., (2012), “Country Presentation Energy Policy (A) Course: Japan 2012”, IEEJ (International Energy
Economics Institute), http://eneken.ieej.or.jp/data/4447.pdf.
SOPAC (South Pacific Applied Geoscience Commission) (2007), “Biofuel from Coconut Resources in
Rotuma: A Feasibility Study on the Establishment of an Electrification Scheme using local Energy Resources”,
SPC Applied Geoscience and Technology Division, www.rotuma.net/os/Publications/Biofuel_Rotuma.pdf.
SOPAC (n.d.), “Catalogue of Pacific Rivers: Fiji”, www.pacificwater.org/_resources/article/.
SPC (Secretariat of the Pacific Community) (2008), “Fiji Islands Country Profile, prepared for SPC Strategic
Engagement, Policy and Planning Facility”, SPC, www.pacificwater.org/_resources/article/files/fiji.pdf.
SPC (2011), Framework for Action on Transport Services 2011 2020: Improving the Efficiency, Effectiveness
and Sustainability of Pacific Transport Services, SPC, Noumea.
The Economist (2012), “The Government’s 2012 Budget Includes Radical Tax Reform”, Intelligence Unit,
Fiji, 9th January, http://country.eiu.com/article.aspx?articleid=588723243&Country=Fiji&topic=Economy
&subtopic=Current+policy&subsubtopic=Economic+policy:+The+government’s+2012+budget+includes+
radical+tax+reform#.
Trading Economics (2015), “Fiji Unemployment Rate 1982-2015”, www.tradingeconomics.com/fiji/
unemployment-rate.
Tukana, A., (2005), A Study of Biogas Digesters as an Animal Waste Management Tool on Livestock Farming
Systems in Fiji, Master’s Degree Thesis, The University of Western Sydney, Sydney.
UNdata (n.d.), “Fiji”, http://data.un.org/CountryProfile.aspx?crName=fiji, accessed November 2014.
UNIDO (United Nations Industrial Development Organization) and ICSHP (International Centre on Small
Hydro Power) (2013), “World Small Hydropower Development Report 2013: Fiji”, UNIDO and ICSHP, www.
smallhydropower.org.
UNSD (United Nations Statistics Division) (2011), 2008 Energy Balances and Electricity Profiles, UNSD,
New York.
World Bank (1978), “Monasavu-Wailoa Hydropower Project (Power 1): Staff Appraisal Report”, World
Bank, Washington, D.C., 22 May, www-wds.worldbank.org/ECC9554A-ECB1-4557-B5BA-29707DAF01B7/
FinalDownload/DownloadId-D81FA78F8F468BACDCA39D5DAC2A596C/ECC9554A-ECB1-4557-B5BA29707DAF01B7/external/default/WDSContentServer/WDSP/IB/2000/08/02/000178830_98101912374259/
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Republic of Fiji (2003-2009), World Bank, Washington, D.C.
World Bank (n.d.), Pacific Economic Monitor 2014, ADB and http://data.worldbank.org/country/fiji
38 Fiji
ANNEX:
GEOTHERMAL ENERGY
Geothermal Energy
Geothermal energy is not available in all countries or locations, but where it is
found, it is a clean, renewable energy source that produces electricity and heat
at very competitive cost. Geothermal energy is ultimately derived from the heat
contained in the core of the earth and from radioactive decay within the earth’s
mantle. At high temperatures and pressures within the mantle, melting of mantle
rock forms magma, which rises towards the surface carrying the heat from below.
In some regions where the earth’s crust is thin or fractured, or where magma bodies
are close to the surface, there are high temperature gradients. Deep faults, rock
fractures and pores allow groundwater to percolate towards the heat source and
become heated to high temperatures. Some of this hot geothermal fluid travels
back to the surface through buoyancy effects to appear as hot springs, mud pools
and geysers. Such hot springs can be observed in many locations in Fiji as shown
in figure 12.
If the ascending hot water meets an extensively fractured or permeable rock zone,
the heated water will fill pores and fractures and form a geothermal reservoir. These
reservoirs are much hotter than surface hot springs, reaching temperatures of more
than 350°C, and are potentially an accessible source of energy. Reservoirs can also
be created artificially (as hot dry rock systems) by injecting water into geothermal
rock causing hydraulic fracturing. The natural replenishment of heat from earth
processes and modern reservoir management techniques enable the sustainable
use of geothermal energy as a low-emission, renewable resource. With appropriate
resource management, the heat from an active reservoir is continuously restored
by natural heat production, conduction and convection from surrounding hotter
regions, and the extracted geothermal fluids are replenished by natural recharge
and/or by injection of the depleted (cooled) fluids.
Worldwide, geothermal resources have been used commercially for more than a
century. Geothermal energy is currently used for base load electric generation in
24 countries, with an estimated 67.2 TWh/year of electricity supply provided in
2008, at a global average capacity factor of 74.5%. Newer geothermal installations
often achieve capacity factors above 90%. Geothermal energy serves more than
10% of the electricity demand in six countries and is used directly for heating and
cooling in 78 countries, generating 121.7 TWh/year of thermal energy in 2008
(Goldstein, et al., 2011).
Outside of the United States of America, about 29% of the global installed
geothermal capacity in 2009 was located in the Philippines and Indonesia. Iceland,
Italy, Japan, Mexico and New Zealand together account for one-third of the global
installed geothermal capacity.
Fiji’s neighbour, New Zealand, operates 12 geothermal power plants with a total
capacity of 975 MW and an annual production of 7,300 GWh or 10 times the total
current electricity generation in Fiji. The average capacity factor of New Zealand’s
geothermal power plants is 85%; the largest plant, Te Mihi, has an installed capacity
of 159 MW and a capacity factor of 86%. This latest plant has an investment cost of
about USD 3,000 per kW or USD 0.4 million per annual GWh. This is 85% less than
in FEA’s latest hydropower scheme.
Renewables Readiness Assessment 39
Geothermal Technology
Geothermal power generation has a low footprint
and is environmentally sustainable. The basic
types of geothermal power plants in use today are
steam-condensing turbines, backpressure turbines
(for small-size plants only) and binary cycle
units. Steam- condensing turbines can be used in
flash or dry-steam plants operating at sites with
intermediate- and high-temperature resources
(>150°C). The power plant generally consists of
pipelines, water-steam separators, vaporisers,
demisters, heat exchangers, turbine generators,
cooling systems, and a step-up transformer for
transmission into the electrical grid. Power unit size
usually ranges from 2 MW to 110 MW, and the unit
may utilise a multiple flash system, flashing the fluid
in a series of vessels at successively lower pressures,
to maximise the extraction of energy from the
geothermal fluid. The only difference between a
flash plant and a dry-steam plant is that the latter
does not require brine separation, resulting in a
simpler and cheaper design (Goldstein, et al., 2011).
Binary cycle plants, typically organic Rankine cycle
(ORC) units, are commonly installed to extract
heat from low- and intermediate-temperature
geothermal fluids (generally from 70°C to 170°C)
from hydrothermal and enhanced type reservoirs.
Binary plants are more complex than condensing
ones since the geothermal fluid (water, steam or
both) passes through a heat exchanger heating
another working fluid. This working fluid, such as
isopentane or isobutene with a low boiling point,
vaporises, drives a turbine, and then is air-cooled
or condensed with water. Binary plants are often
constructed as small modular units of limited MW
capacity and could be the technology choice to
exploit Fiji’s resources. More recently, geothermal
combined cycle plants have been installed that
utilise a steam turbine with binary plant heat
exchangers acting as the condensers, and additional
binary plants operating on the separated brine. A
potential variation on the binary cycle concept is the
Kalina cycle, which uses an ammonia-water mixture
rather than an organic fluid, such as isopentane, as
the working fluid. Whichever plant type is selected,
the relatively low steam temperatures and pressures
mean that the efficiency of conversion of heat to
electricity is around 15%, which is lower compared
with fossil fuel-fired plants.
Like all other renewable energy technologies,
geothermal power projects typically have high
upfront investment costs due to the need to
drill wells and construct complex power plants.
Operational costs are relatively low and vary
46
depending on plant capacity, injection well
requirements, and the chemical composition of the
geothermal fluids. Operating costs for geothermal
plants are predictable in comparison with
combustion-based power plants that are subject
to market fluctuations in fuel prices.
Investment costs for a geothermal electric project
are composed of the following components: (a)
exploration and resource confirmation; (b) drilling
of production and injection wells; (c) surface
facilities and infrastructure; and (d) the power
plant. Component costs and factors influencing
them are usually independent from each other,
and each component is described in the text that
follows, including its impact on total investment
costs. The first component (a) includes lease
acquisition, permitting, prospecting (geology and
geophysics) and drilling of exploration and test
wells. Drilling of exploration wells in green-field
areas is reported to have a success rate of typically
about 50% to 60%. Confirmation costs are affected
by well parameters (mainly depth and diameter),
rock properties, well productivity, rig availability,
time delays in permitting or leasing land, and
interest rates. This first component represents
between 10% and 15% of the total investment cost
but for expansion projects may be as low as 1% to
3% (Goldstein, et al., 2011). Drilling of production
and injection wells (component b) has a success
rate of 60% to 90%. Drilling costs vary with type
of hole, geology, and mobilisation cost for drilling
rigs. Relevant literature quotes typical drilling
cost at USD 1 200/m;46 with a drilling depth of
500 - 1000 metres, an exploration well would cost
around USD 1 million.
Factors influencing generation cost include well
productivity (permeability and temperature),
well depths, rig availability, vertical or directional
design, special circulation fluids, special drilling
bits, number of wells and financial conditions in
a drilling contract. This component represents
20% to 35% of the total investment. The surface
facilities and infrastructure component (c) includes
facilities for gathering steam and processing brine:
separators, pumps, pipelines and roads. Vapourdominated fields have lower facility costs since
brine handling is not required.
Factors affecting this component are reservoir
fluid chemistry, commodity prices (steel, cement),
topography, accessibility, slope stability, average
well productivity and distribution (pipeline
diameter and length), and fluid parameters
(pressure, temperature, chemistry).
Jennejohn, Dan (2009) Research and Development in Geothermal Exploration and Drilling, Geothermal Energy Association.
40 Fiji
Figure 15: Investment Cost for Geothermal Power
Source: Goldstein, et al., 2011
Surface facilities and infrastructure costs
represent 10% to 20% of the investment, although
in some cases these costs could be less than
10%, depending upon plant size and location.
Figure 15 displays typical investment cost for
geothermal power generation depending on type
of technology. Investment costs are typically below
USD 4,000/ kW but may reach USD 6,000/kW for
smaller-size plants that are likely to be relevant
for Fiji.
Each geothermal power plant has specific O&M
costs that depend on the quality and design of
the plant, the characteristics of the resource,
environmental regulations and the efficiency
of the operator. The major factor affecting
these costs is the extent of work-over and
make-up well requirements, which can vary
widely from field to field and typically increase with
time. For the United States of America, O&M costs,
including make-up wells, have been calculated
to be around USD 0.025/kWh. New Zealand
reports O&M costs in a range from USD 0.01/kWh
to USD 0.014/kWh for plants in the 20-50 MW
capacity range, meaning that short-run marginal
cost for geothermal generation is in the same
range as hydropower or wind.
Investment and O&M costs lead to levelised
generation cost in the order of USD 0.06/kWh.
These costs are dependent on technology,
capacity factor achieved and discount rates.
For smaller plants, lower than 10 MW, levelised
costs may reach USD 0.10-0.12/kWh. Even at the
high end of the levelised cost figures, geothermal
power would be significantly cheaper than any
other generation option available in Fiji. Apart
from potentially becoming the least-cost option
for power generation in Fiji, the development
of Fiji’s geothermal resources would significantly
enhance energy security and enable the utility to
reduce tariffs.
At present, power supply is highly vulnerable and
exposed to hydrological risks and to market risks
for fossil fuel. There are also fuel supply risks for
biomass wastes associated with fluctuations in
sugar production.
Renewables Readiness Assessment 41